Government, Tan set to sign MOA on PNB rehab

The government and beer and tobacco magnate Lucio Tan are prepared to sign the memorandum of agreement (MOA) for the rehabilitation of the Philippine National Bank (PNB) but last-minute snags are threatening to block the final agreement that would detail the so-called "reverse privatization" of the bank.

According to Philippine Deposit Insurance Corp. (PDIC) president Norberto Nazareno, both the government and the Tan group are prepared to sign the MOA tomorrow.

The official signing ceremony has been scheduled at 4 p.m. but the parties still have to wait for two of three requirements that would clear the path of the execution of the agreement after almost a year of negotiations.

The MOA has already been cleared by the Department of Justice but government is still waiting for the Senate to wrap up its ongoing investigation into the transaction which would be a signal for Malacañang to give its own blessing.

"But we are thinking of signing on Friday," said Nazareno, who sits as member of the PNB board of directors, representing the government. "The government and the Tan group are prepared to sign."

However, Sen. John Osmeña said that the Senate committee looking into PNB’s reverse privatization might not be able to produce the report in time for the scheduled signing.

"The earliest we can produce a report is on Monday," Osmeña said.

The Senate opened the investigation into the bank run that led PNB to borrow P25 billion from the PDIC to bail it out of a potential crisis that could have toppled the bank.

The Senate committee has conducted several hearings but it was still waiting for documents from the PNB that would dispel speculation that Tan himself triggered the bank run in order to secure an emergency loan from the PDIC.

In the MOA, government would agree to convert part of the P25 billion loan into equity in the bank, effectively buying back some of the shares that it sold to Tan when the bank was privatized.

Tan, on the other hand, agreed to give the government irrevocable voting rights to the extent of the preferred shares that government would be receiving through the PDIC.