Government submits choices for top PNB posts

The government has submitted three names each for the top two posts from which the group of Lucio Tan will choose as part of the rehabilitation program for the debt-strapped Philippine National Bank.

Finance Secretary Jose Isidro Camacho said the government panel negotiating with Tan’s group already shortlisted three candidates each for the chairmanship and presidency of PNB. All of the candidates are bankers.

Camacho said government wants to fasttrack the process so that a new set of officers along with other new members of the PNB board of directors, will be able to execute a memorandum of understanding (MOU) with government spelling out its takeover and recovery program for the bank.

"We hope to speed up the selection process while finalizing the MOU. Ideally, there should be a set of officers to execute the agreement," Camacho said.

He said he expected both parties to come to terms and finally sign the term sheet that specifies the parties’ obligations under the proposed rehabilitation program for PNB. What follows after the signing of the term sheet is the signing of the MOU which details the scope of the recovery plan.

This week, Philippine Deposit Insurance Corp. chairman Norberto Nazareno stepped down as concurrent chairman of PNB to focus on his work as PDIC head.

Last week, government chose banker Edward Go as the new chairman of PNB effective this week. Nazareno, however, remains a director until such time as a new board is installed.

Go, according to Nazareno, is an experienced banker, having been connected previously with Global Bank where he was vice-chairman and was also formerly the president of Asian Bank. Prior to these posts, he was connected with China Bank, Philippine Bank of Communications, Citibank N.A. and Philbanking Corporation.

At the same time, current PNB president Feliciano Miranda will also be replaced, but this will only be done after the government negotiating panel submits to Tan a shortlist of candidates.

Both parties agreed to implement major changes in organization and management.

Government is entitled to nominate four members to the PNB board, one independent director and the president. Aside from nominating Go as board chairman, government will also nominate the chairman of the executive committee, chief financial officer, corporate secretary and the deputy general counsel.

Tan’s group will nominate five members to the board, one independent director, general counsel, assistant corporate secretary and deputy chief finance officer.

The PDIC has a P10-billion loan exposure to PNB, a portion of which, together with the Bangko Sentral ng Pilipinas’ P15-billion exposure, could be converted into equity as part of the rehabilitation plan.

The parties earlier agreed to convert about P7.8 billion of the P25-billion government loan to PNB into additional equity for the state of P40 per share which is lower than the current market price.

Previously, Nazareno added that other possible alternatives for government to recover its exposure in PNB other than the debt-to-equity conversion would be through either a restructuring of the debt or through a dacion en pago or turnover of the bank’s idle assets to the government.