BSP reiterates continued support for PNB

Bangko Sentral ng Pilipinas Governor Rafael B. Buenaventura reiterated yesterday the BSP’s support for the Philippine National Bank (PNB) after confirming that the BSP extended a P25-billion emergency loan to PNB last month following heavy withdrawals in September due to uncertainty over taipan Lucio Tan’s additional capital infusion of P10 billion in the bank.

Buenaventura explained that "the reason why we gave an emergency loan was to ensure that PNB would be kept viable if its goes down, it will represent a systemic risk." He reiterated that the BSP is ready to support PNB.

Reports about PNB’s continued problems caused some jitters among depositors who again flocked to PNB branches.

BSP’s assurance of support, however, comes at a time when the BSP and the Tan-controlled management of PNB continue to disagree on the terms and conditions of a rehabilitation plan for the bank.

According to Buenaventura, the BSP wants PNB to flesh out its various plans on such things as cutting unnecessary expenditures and implementing controls on credit and rationalization of the organization.

Buenaventura criticized PNB president Feliciano Miranda for claiming that the PNB rehab program had already been approved when it hasn’t. He clarified that the BSP has approved "in principle" a rehab program for the bank following the P10 billion equity infusion by Tan. However, Buenaventura said, the rehab program has to be fleshed out further and there must also be further agreement on the cost of the rehab program.

The BSP chief pointed out that the rehab program may need more cash infusion on top of the P10 billion already put in by Tan.

There also appears to be some confusion over the possibility of using part of the P25-billion emergency loan extended by BSP to finance the rehab. Buenaventura said the P25-billion emergency loan is supposed to be a short-term loan renewable every 90 days and which should be repaid. – Marianne Go