Metrobank drops bid to acquire 76% of PNB

Metropolitan Bank & Trust Co. (Metrobank) is no longer interested in the combined 76 percent stake of the government and Lucio Tan in Philippine National Bank (PNB) having regained the top slot in the industry after acquiring majority shares in Solid Bank last week, a ranking official of the bank told The STAR over the weekend.

"Before, there was some interest (in PNB). But right now, we already got what we want," the official, requesting anonymity, said.

Last week, Metrobank formalized its acquisition of 40 percent of the shares of Bank of Nova Scotia in Solid Bank by paying P3.9 billion in cash. It now owns 91 percent of Solid Bank. It would pave the way for the merger between Metrobank and Solidbank.

The merger would create the country's biggest bank with total resources estimated at P339.784 billion, combined capital of P51.561 billion and 825 branches.

Analysts said Metrobank was apparently turned off by reports that the PNB balance sheet is not that solid. For instance, auditing firm Pricewaterhouse Coopers found out that PNB's non-performing loan (NPL) ratio is the highest in the industry at 40 percent of total loans as of end-1998. PNB has disputed the figure, saying it was only at 29 percent.

NPLs are loans not paid for three straight months.

Aside from its high NPL ratio, analysts said PNB, while it boasts of a 30 percent share in the remittance business due to its large overseas branch network, lags behind the industry in most measures of profitability, asset quality and capital strength. In fact, it needs over P10 billion in fresh funds to build up its capital.

The government and PNB were supposed to auction off their stakes in PNB on May 26 but it was postponed to a later date to give interested buyers more time to conduct a due diligence or to conduct a thorough evaluation of its financial condition.

However, Tan was agreeable to postpone the bidding only if the government agreed not to pull out its deposits from PNB.

The Metrobank official said it is still in the process of integrating the operations of Solid Bank. It is expected to be completed shortly. Aside from Solid Bank, Metrobank, through its affiliate, Global Bank, has acquired Asian Bank and Philippine Banking Corp.

In recent years, Metrobank had expanded primarily through internal growth of capital and equity contribution from its major shareholder, George S.K. Ty. This was the first time that it has been aggressive in expanding its presence through a series of mergers and acquisitions.