In a letter to Pimentel, Mison said it was unfair for the senator to blame PNB’s financial travails to supposed mismanagement under businessman Lucio Tan.
"I am sure you have documents that were accumulated by the Senate committees investigating the matter that PNB had suffered tremendous losses due to the bad loans it lent even to government agencies and local government units before Tan got into it," he said.
He said precisely this was the reason Tan bought into PNB – to bring it out from the pit of bankruptcy. "In fact, Tan and his group twice poured in P10 billion so as to increase the level of capital of PNB."
Mison said when Tan took over PNB, he tried vigorously to collect from the bad loans, restructured those that are still viable, as well as reduced the operating expenditures of the bank.
"Even after the bank undertook severe restrictions on its loan policies, PNB still lost P6 billion in 2000 and P4.5 billion in 2001 due largely to additional provisions for losses from loans granted under government management. Logically, the government, not the Lucio Tan Group, should be responsible for these losses," Mison added.
Mison also refuted Pimentel’s query on whether "we are not wittingly perpetrating a fairly recent anomalous practice of getting the people to pay for the losses of a businessman."
"What losses are you referring to? The loans granted by BSP (Bangko Sentral ng Pilipinas) and PDIC (Philippine Deposit Insurance Corp.) to PNB are fully secured by very good collateral with appraised values equal to as much as 150 percent of the loans granted," he pointed out.
He added that the grant of the loans and their terms are strictly in accordance with both the charters of the BSP and PDIC and the revised General Banking Law. "The loan of P10 billion from PDIC will be fully paid for by loans granted by PNB to, and securities issued by, different government entities. In other words, the government will just pay for its obligation to PNB," Mison said.
He said the conversion of part of the loans granted by BSP into the equity of PNB (which was a requirement of the government) at P40 per share meant a dilution of the equity of the Tan Group from 65 percent to 45 percent. "The P29.50 par value valuation by Price Waterhouse mentioned by the committees failed to consider its (Price’s) report of P14-billion additional value in the bank’s assets acquired that may be considered in determining the book value of the bank’s shares. If this was considered – as Price Waterhouse said it may be – the book value of PNB shares will exceed P66," Mison stressed. Three Senate committees and the Department of Justice have given the green light to the P25-billion loan bailout to and reverse privatization of PNB. The Senate committee report stated that PNB was already experiencing reserve deficiencies even before Tan finally took over the bank in 1999.