PNB to issue P5-B long-term negotiable CDs

MANILA, Philippines - The Philippine National Bank (PNB) will issue P5 billion worth of long-term negotiable certificates of deposits (LTNCD) to cover maturing debts as well as prepare for its impending merger with Allied Banking Corp.

“We are just replacing matured Tier 2, and for asset build-up,” a bank official familiar with the plan said.

In 2008, the bank issued P6 billion worth of unsecured subordinated debt classified as lower Tier 2 capital.

Last June, PNB likewise redeemed the P5.5-billion unsecured subordinated notes issued in August 2006 with a 10-percent guiding interest rate.

Meanwhile, the official said internal preparation for the merger between the two banks “is just waiting for the all the legal documentations.”

Early this month, the 28-percent equity held by Allied Bank in US-based Oceanic Bank was placed in trust with a US-based trustee. This undertaking, in effect, would free up Allied Bank in proceeding with its merger with PNB.

The bank official said that immediately after the US Securities and Exchange Commission gives its approval of the trusteeship of Allied Bank’s holdings in Oceanic Bank, the bank would have to secure approvals from domestic corporate and financial regulators.

“Meantime, we (Allied Bank and PNB) also have to undergo valuation reviews since the earlier reviews were done nearly three years ago.”

In 2008, the respective boards of both PNB and Allied Bank approved a merger plan with PNB as the surviving entity.

However, the merger plan could not get underway as US monetary authorities wanted Allied Bank to divest its holding in Oceanic Bank, where it held a 28-percent stake.

Due to the poor economic conditions in the US, there were no takers for the 28-percent stake, thus delaying the merger process anew.

For the meantime, the two banks have started integrating operations such as rationalizing the positioning of their respective branches.