CEBU, Philippines - Despite the long delay of the formal merger of Philippine National Bank (PNB) and Allied Bank, both banks have already set up the operational integration to hasten the process once papers are sealed.
PNB president and chief executive officer PNB Eugene Acevedo said that technically PNB and Allied Bank have already adopted joint operational set up in preparation of the official merger announcement.
However, Acevedo said the merger is expected to happen before the end of this year, as minimal glitches are still being ironed out.
What causes the delay he said is the technical requirement of the United States Federal Reserve, as Allied Bank owns a small part of San Francisco-base Oceanic Bank, and PNB has an existing banking license in the US.
Based on the US rule, no external parties are allowed to own two banks, or what the industry call as “parallel banking”.
“We want to keep our license in PNB, and unload the Allied’s ownership in Oceanic Bank,” Acevedo said adding that once the stake of Allied to Oceanic Bank will be sold, the official merger will be announced.
The US Federal Reserve has required Allied Bank to dispose of its 28 percent stake in Oceanic Bank prior to its merger with PNB. The merger was supposed to have been completed last December of 2008.
In the Philippines, merger process of the two Lucio Tan-owned banks is not a problem. In fact papers have been readied, while the Bangko Sentral Ng Pilipinas (BSP) is encouraging mergers among banks.
Once official, Acevedo said there will be no major changes in terms personnel movement between two banks, as it has been worked out already. If there are changes it will only be very “minimal.”
With the merger move, PNB is seen to swallow the Allied Banking operation, and will make PNB the fourth strongest bank in terms of assets in the country. At present, PNB is currently ranked fifth in assets while Allied Bank is at 11th spot.
The merger between PNB and Allied Bank was approved by the stockholders of both banks in 2008. Tan controls approximately 67 percent of PNB and 75 percent of Allied Bank.
The two banks have already made significant progress to fast –track the integration process, Acevedo said adding that the operation interconnection of their automated teller machines has been in placed to enable cardholders to do balance inquiry and cash withdrawals from other’s ATM without charges.
Acevedo reiterated that the merger will harness the synergy of the two banks and will enhance the competitive positioning of PNB—the surviving bank.
The merger will also make PNB to operate a total of 630 branches nationwide. At present, PNB has 324 branches, excluding the 15 new branches that will be opened within this year.
In 2010, PNB registered its highest income ever in recent years as net profits surged to P3.54 billion, surpassing the previous year’s level of P2.20 billion by a hefty 61 percent.