Government’s stake in PNB seen to generate P9B to P16B

The government’s remaining shares in the Philippine National Bank (PNB) is estimated to generate between P9 billion and P15 billion for the national coffers.

The PNB made this estimate as the government announced that it has initiated the joint sale of 67 percent of PNB held by the government and the Lucio Tan Group of Companies.

The Arroyo administration has decided to sell its interests in PNB before September, drumming up interests for its holdings in the bank which represents a 45 percent voting right held by the Philippine Deposit Insurance Co. (PDIC).

The Bangko Sentral ng Pilipinas (BSP) said sale of government interests in the PNB will be good for both the government and the banking industry.

BSP Governor Rafael B. Buenaventura told reporters yesterday that with its limited resources, government is better off focusing on areas in banking that private banks have not fully addressed like development financing and lending to small and medium enterprises (SMEs).

According to Buenaventura, commercial banking was better left to commercial banks and government was better off realizing the value of its PNB holdings instead of holding on.

Buenaventura said the timing of the planned sale was also perfect, considering the improvements in the country’s economic and investment prospects.

"They have tried selling this bank in the past and failed but the conditions then are radically different from the conditions today," he said. "At the time, we were just getting out of the 1997 crisis. Today, we are looking at better prospects in the banking sector."

Buenaventura said the only banking regulation that would be involved in the sale was the BSP’s fit-and-proper qualification to ensure that whoever would acquire the PNB shares would be legitimate business groups.

"But considering a bank of PNB’s size, the only people who would be interested are people who have substantial amounts of investment funds because we are talking about a substantial amount of money," he said. "So whoever would be interested are sure to be people with credibility, finances and expertise."

Buenaventura said the government should be able to get a good price for its PNB shares, considering the timing was good. "At least its better than the first time we tried to do this," he said. "This time we have political stability and there has been a return to profitability since last year. Clearly there is momentum building up."

Buenaventura said the PNB block was made even more attractive by the fact that it represented absolute control in the bank.

"If anyone would put in that kind of money into any bank, you’d want absolute control or it wont make sense to put in that money at all," he explained. "So the joint sale of all 67 percent will be the best for both parties."