PDIC president Norberto Nazareno said the state-owned insurance firm cannot accept the proposal since its charter does not allow it to directly have stakes in banks and it still has to consult with the Department of Budget and Management on whether government can absorb the loan.
PNB acquired the P10-billion emergency loan last year from the PDIC to stave off a bank run when it was hit by heavy withdrawals resulting from the uncertainty over Tan’s commitment to infuse capital into the bank.
The PNB earlier said it wants to settle the loan by transferring to the PDIC an estimated P9-billion in non-performing loans it had incurred by lending to the national government when it was still majority owned and controlled by the government.
Some of these loans date back to the time of the late president Ferdinand Marcos and Fidel V. Ramos.
Today, about P6 billion of the P9-billion loans were given to the National Sugar Trading Corp., Bureau of Customs and the Philippine Airlines.
Nazareno said PDIC will still consult with the DBM and resolve if the government will take in the obligations which will have to be given appropriation. Also, the loans will have to be certified by the borrowing agencies concerned.
Bangko Sentral ng Pilipinas Governor Rafael Buenaventura said the issue on converting the PNB debts into equity is a matter for the Department of Finance to resolve.
"We have to give the DOF a chance to review the situation and see if the proposal is consistent with their goals, the bottomline is keep PNB viable," the BSP chief said. – Rocel Felix