Union Bank, foreign partner get clearance to bid for PNB

The Monetary Board, the policy-making body of the Bangko Sentral ng Pilipinas (BSP), has approved the application of Union Bank of the Philippines and its partner, foreign investment bank Avenue of US, to bid for the joint sale of Philippine National Bank (PNB) shares.

MB member Vicente Valdepenas told reporters yesterday that the monetary authority, in approving the application of Union Bank/Avenue of US, believed that the group has the capacity to vie for the PNB stake.

"Avenue of US has $6.5 billion in assets while Union Bank is an overcapitalized bank," he said.

Valdepeñas said in case the group wins, Union Bank also has the capability to quickly effect the merger and/or consolidation of PNB with Union Bank operations.

"When they acquire it (PNB), they can hit the ground running and will not have to wait for weeks before they can run the bank because Union Bank has the high-tech facility and highly-wired facilities," the MB official said.

Thus far, Union Bank/Avenue is the only official contender of businessman Lucio Tan in vying for the 67-percent stake in PNB. Tan, based on the previous sale agreement with the government on the PNB shares, has the right of first refusal. This means that the liquor and cigarette tycoon would be allowed to match or top the highest bid.

According to Valdepenas, no other bank or consortium has yet submitted a similar application with the BSP to participate in the bidding of PNB shares. Every interested bank has to seek an approval from the MB since the transaction involves a transfer of ownership. "We gave the franchise of PNB so we have to retrieve it once it is sold to another bank," he said.

Aside from the Union Bank/Avenue group, there are three other investment fund managers that have signified interest to bid for the PNB stake. Sources said these foreign firms that have likewise been pre-qualified for the PNB bidding include New Bridge, BA Marathon of Korea and Phil-Am Bank.

These entities are among the 10 bidders earlier floated by the Department of Finance (DOF).

Banking sources said the 10 interested bidders have been conducting due diligence on PNB ahead of the scheduled Aug. 12 bidding. US-based New Bridge had earlier showed interest in buying a stake in Equitable PCI Bank. BA Marathon, meanwhile, is one of the biggest export-import banks in Korea.

"We are greatly encouraged by the high level of investor interest in this joint sale," said Finance Secretary Margarito Teves. "This is a significant milestone in our privatization program and will help us partially recover the losses incurred by the suspension of the expanded value-added tax."

The finance chief added that upon completion of the sale, PNB would remain as a government depository bank until May 2007.

The government and the Lucio Tan Group each own a 45-percent stake in PNB.

Based on the joint sale agreement, the group will be allowed to match the highest bid if it accepts the floor price determined by the government and eventually participate in the bidding process. Last June, the Tan group accepted the government’s floor price of P43 per share.

PNB has 324 branches and offices in the Philippines and 97 branches, offices, and subsidiaries abroad.

The bank is the fifth largest domestic bank in the Philippines in terms of total assets and is the market leader in servicing overseas Filipino workers remittances.