The "soon-to-be recovered" P8 billion will come from the P4.8-billion loan of the debt-ridden National Steel Corp. (NSC) and another P4 billion from Citra Metro Manila Tollways Corp.
PNB president Lorenzo V. Tan said the Citra case is a simple case of restructuring the letter of credit (L/C) utilized as collateral. The NSC case is more complex.
He said the NSC will first have to form a special purpose asset vehicle (SPAV) group that will enable creditors including the PNB to convert part of their loans into equity. Both the creditors and majority shareholders will own the SPAV under an 80-to 20-percent equity basis.
The net effect would be the conversion of the P4.8 billion out of the total P5.6-billion loan into equity for PNB.
"A lot of our loans only need restructuring," Tan added.
The restructuring of some of its NPLs in the first quarter next year could reduce its total losses by another P2.9 to P3 billion for the whole of 2003.
PNB officials however confided that reduction of losses this year would likely end up at P1.8 billion or lower than earlier forecast.
The reason behind the shortfall was the bank’s inability to dispose or restructure the P2-billion debt of the Manila Electric Co. (Meralco) and the P3.2-billion debt of East Asia Power Corp.
It also has 19,000 foreclosed properties and its headquarters in the reclaimed area in Pasay City. The bank originally wanted to sell its head office at an estimated cost of P6.5 billion and move to a new site either at the Petron Plaza along Buendia Ave., or at the BA-Lepanto bldg. along Paseo de Roxas Ave. of which they have a stake.
Tan said they have decided not to sell the head office as the bank’s rehabilitation had resulted in new corporate adjustments.
The depressed property market will not result in decent returns. In contrast, the reclaimed area has been attracting more tenants including the SM Group. "We will sit on it."
As of end 2001, the bank’s non-performing assets (NPAs) stood at approximately P90.3 billion of which some P42.2 billion are NPLs, at least P23.5 billion are real and other properties owned or acquired (ROPOA), and P18.8 billion are classified as other assets. – Ted Torres