PNB merges with Allied Bank

PHILIPPINE NEWS SERVICE –THE boards of Allied Banking Corp. and Philippine National Bank yesterday approved the banks’ merger to create the Philippines’ fourth-largest bank in assets, loans and deposits, and with PNB as the surviving entity, Allied Bank president Reynaldo Maclang said yesterday.

Both banks are controlled by taipan Lucio Tan whose other interests include airlines, tobacco, breweries, beverages and real estate.

“The merger comes at a time when the banking industry is poised for continued growth,” Maclang said.

“The changing regulatory environment and increased sophistication of customers require an extensive branch network and know-how. Our merger is a competitive response to the industry’s development.”

The banks expect the transaction to close in the third quarter. Their shareholders are scheduled to take up the merger proposal at their meetings, which are both set for June 24.

Tan, 71, set up Allied Bank in 1977 and acquired majority control of PNB after it was privatized in 1989.

PNB is the pioneer in the remittance industry and held P240 billion in assets last year.

Allied Bank’s niche is in the market serving the Chinese-Filipinos and small and medium enterprises. Its assets totaled P148 billion last year.

PNB closed at P30.50 a share yesterday from Tuesday’s P28, with a par value of P40 a share. Allied Bank’s shares have a par value of P1,000 each, but these are not traded in the market even if the bank is listed.

“The banks’ merger would be done through a share-for-share exchange, with PNB issuing 457 million new shares at P55 a share,” ING country manager Manuel Salak III said.

He said the transaction was worth P61.8 billion, with PNB valued at P36.6 billion and Allied Bank at P25.2 billion.

PNB, the surviving entity, will be issuing new shares in exchange for 100 percent of Allied Bank’s shares.

PNB will be swapping 140 of its shares for every common Allied Bank share, and 30.73 of its shares for every Allied Bank preferred share.

Maclang said the merged bank would become the country’s fourth largest in resources with its assets totaling P388 billion. It would also be the fourth largest in loans and deposits at P141 billion and P297 billion, respectively.

PNB president Omar Byron Mier said PNB would have the largest international footprint among Philippine banks with 124 international offices following the merger.

The merger would give the surviving entity a distribution network of 626 domestic branches and 614 automated teller machines, he said.

“The merger will have a positive impact on the overall financial performance of the new bank given the complementary client base, enlarged distribution platform, strong capital position and expected merger synergies,” Mier said.