PNB, Allied Bank to merge via P25-B share swap

MANILA, Philippines- The Philippine National Bank on Wednesday confirmed months of market rumors by announcing that it was merging with its affiliate Allied Banking Corp. through a P25-billion share swap. In a press conference, PNB president Omar Mier said PNB will be buying out 100 percent of Allied Bank through a share swap where PNB will issue 457 million new shares worth P55 each. The merger, once approved by the shareholders of both banks on June 24, will create the country's 4th largest bank with a combined total asset of P388 billion. Both banks are owned by the group of tobacco magnate Lucio Tan. PNB will be the merger's surviving entity. According to Mier, PNB would issue 140 PNB shares for every common share of Allied Bank and 30.73 PNB shares for every preferred Allied Bank share. Once the transaction is approved by stockholders, Mier said the Lucio Tan Group would own 80.7 percent and the balance would be owned by the minority shareholders of Allied Bank and PNB. Allied Bank president Reynaldo Maclang said the boards of directors of PNB and ABC have nominated Mier to head the new entity as president and CEO although he said the full organizational impact was still unclear. After the merger, Mier said PNB would also a combined distribution network of 626 branches and 614 nationwide, making it the third largest private domestic bank in terms of branches. "In addition, we will have the largest international footprint across the AsiaPacific region, Europe, the Middle East and North America," Mier said. PNB would then have a total of 124 foreign offices, branches and subsidiaries abroad. "Our revenue mix will be spread out from our remittance business, the Filipino-Chinese business both for retail and corporate consumer business, government and government-related businesses where we are very strong, corporate lending and consumer loans," he added. Mier said the combined capabilities of PNB and Allied Bank would bring down the bank's cost of funds to as low as 2.5 percent, way below the industry average of about 3 percent. "This will be, if not the highest, one of the highest CAR in the industry," he said. He said the CAR already factored in the issuance of lower tier 2 capital by both PNB (P3 billion) and Allied Bank (P4.5 billion) this year. The merger would affect over 9000 employees of both banks but Mier said the resulting retrenchment was not likely to be significant since the individual businesses of the two banks did not overlap. "We've initially identified 10 to 15 locations where we are both located, for example," he said. "We are not giving up any of our branches, we will just relocate them. We don't know what the numbers are right now." However, Mier ruled out the possibility of any more acquisition for PNB, saying that it would take at least three to five years for the bank to digest the integration process with Allied Bank. - GMANews.TV