BSP approves equity infusion by PNB into holding firm

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has given Lucio Tan-led Philippine National Bank (PNB) the green light to infuse additional equity investment in its wholly owned holding firm as part of plans to dispose low-earning assets to build up the bank’s financial position.

In a disclosure to the Philippine Stock Exchange (PSE), PNB said its board of director has noted and confirmed the report on the approval of the BSP of the additional equity investments in PNB Holdings Corp.

“This is part of bank’s plan to realize the market value of its prime properties and reduce its low-earning assets to strengthen its financial position,” it said.

The Tan-led bank has completed the required regulatory approvals as PNB Holdings also received the certificate of approval of increase of capital stock from the Securities and Exchange Commission (SEC) last Jan. 14.

With the approval, PNB acquired an additional 466.77 million shares of PNB Holdings with a par value of P100 per share amounting to P46.67 billion in exchange for certain real estate properties of the listed bank.

This forms part of a series of transactions to realize the market value of the bank’s prime properties and reduce low-earning assets to strengthen the bank’s financial position.

Last Sept. 10, PNB’s board of directors   approved a plan to realize the market value of its prime properties and reduce its low-earning assets to strengthen its financial position.

Earlier, PNB president and chief executive officer Jose Arnulfo Veloso said the transaction would allow the bank to beef up its lending portfolio by P80 billion from the sale of low-earning assets within the year.

PNB’s inventory includes the 10-hectare PNB Financial Center along Macapagal Boulevard in Pasay City, office buildings in the central business district in Makati City, as well as the foreclosed eight hectare property from Department of Information and Communications Technology undersecretary Ramon Jacinto.

The Tan-led bank announced in 2018 that it was planning to put up a state-of-the-art and world-class 60-storey building that would serve as its new headquarters.

The pandemic-induced recession has prompted Philippine banks to sacrifice higher earnings by beefing up their respective provision for potential loan losses.

From January to September last year, PNB augmented its COVID-19 war chest to P9.03 billion or six times P1.43 billion booked in 2019, resulting in a 39 percent drop in net income to P3.9 billion from P6.4 billion.