PNB to raise over P10B from sale of debt, assets

MANILA, Philippines - The Philippine National Bank (PNB) aims to raise at least P5.5 billion from the sale of unsecured subordinated debt and another P5 billion from the sale of real and other properties acquired (ROPA) to beef up its capital and bankroll its expansion program.

PNB president and chief executive officer Eugene Acevedo said in an interview with reporters after the bank’s stockholders’ meeting yesterday that it intends to dispose of P5 billion of ROPA this year.

PNB has also started selling of P5.5 billion worth of unsecured subordinated debt qualifying as Tier 2 capital callable with no step-up on June 2016.

The offer size that could be inceased based on oversubscription would end on June 10. Arrangers include PNB and ING Bank NV while selling agents include First Metro Investments Corp. and Multinational Investment Bancorporation. PNB Capital and Investment Corp. as well as Allied Banking Corp. would act as limited selling agents.

The debt paper was supposed to be issued last year but was deferred after the BSP issued Memorandum 2010 - 037 imposing a moratorium on approvals of bank applications to issue Hybrid Tier 1 or Tier 2 capital as it redefines banks’ capital until December 31 in compliance with Basel III that tigthened the definition of instruments that qualify as bank capital.

Acevedo pointed out that PNB intends to open 20 branches and establish 158 automated teller machines (ATMs) as part of its expansion program as it pursues the merger with Allied Bank.

“We are going to put up 15 branches to 20 branches before the end of the year. We are also moving unprofitable branches to locations which make more sense,” he added.

He pointed out that the proposed merger that is awaiting approval by the Bangko Sentral ng Pilipinas (BSP) and the state-run Philippine Deposit Insurance Corp. (PDIC) would result in savings amounting to P1 billion.

The proposed merger, according to him, would cost between P1 billion and P1.5 billion.

Acevedo said PNB hopes to exceed the income registered last year despite the sharp decline in the first quarter of the year.

PNB’s net income jumped 60 percent to P3.53 billion last year from P2.2 billion in 2009 while its assets inched up by 6.6 percent to P302.13 billion from P283.3 billion.

“We aim to beat our 2010 income,” Acevedo told the bank’s stockholders yesterday at the Century Park Hotel.

However, PNB’s earnings plunged 64 percent to P319.78 million in the first quarter of the year from P888.98 million in the same quarter last yeardue to heavy losses in mark-to-market valuation of investments securities.

He said the bank has a few tricks up its sleeves to make sure that it beat its net income last year. “One quarter does not make a year,” Acevedo stressed.

He said the bank hopes to expand its loan portfolio by 20 percent by focusing on consumer loans as well as small and medium-sized enterprises on top of its corporate clients.

He explained that loans to consumers account only for nine percent of the bank’s total loan portfolio while loans to SMEs corner only seven percent.

In all, the bank hopes to raise its two percent share in the industry’s total loan portfolio for consumers to about 10 percent over the next four years to five years.