PNB property swap yields P10 billion

MANILA, Philippines — Lucio Tan-led Philippine National Bank (PNB) managed to beef up its capital base by an additional P10 billion after a property-for-share swap with its wholly owned subsidiary as part of the bank’s efforts to maximize the value of its prime real estate properties.

In a disclosure to the Philippine Stock Exchange (PSE), the listed bank reported approximately P34 billion representing the market value of P46.68 billion and the book value of P12.6 billion of the properties exchanged for shares of PNB Holdings Corp.

“Specifically, the change will be reflected in the bank’s income statement as of May 28, 2021, thereby further strengthening its financial position as the transaction will generate P10 billion in additional capital after the effect of the property dividends,” PNB told the PSE.

Prime properties under its fold include the 10-hectare PNB Financial Center along Macapagal Boulevard in Pasay City, the PNB Makati Center in the Ayala central business district, as well as the foreclosed eight-hectare property at the corner of Buendia Avenue and Paseo De Roxas in Makati City.

Last Jan. 15, PNB’s board of directors approved a plan to swap its prime real estate properties for shares of stock in PNB Holdings. This paved the way for a declaration of a property dividend declaration consisting of 239.35 million of its shares in PNB Holdings last April 26.

As a result, the stake of PNB in PNB Holdings was reduced to 49 percent. The holding firm serves as a holding company that invests, develops, and sells all kinds of assets, majority of which are prime real estate properties. It focuses on maximizing earnings from its current prime assets that already generates a stable recurring cash inflow.

Tan is further expanding his roster of listed companies with the planned listing by way of introduction of PNB Holdings.

Earlier, PNB president and chief executive officer Jose Arnulfo Veloso said the preparatory work for the listing by way of introduction of PNB Holdings Corp. in the Philippine Stock Exchange (PSE) is ongoing.

“At this stage, we cannot provide a definite timeline for the listing as this involves regulatory approvals. However, the listing is a priority of PNB,” Veloso said.

Listing by way of introduction allows a company to list its shares with the PSE without having to sell shares to the public immediately. Under the rules, listing of securities by way of introduction may be appropriate when the securities of an unlisted issuer are distributed by way of property dividend by a listed issuer to shareholders.

The net income of PNB jumped by 34 percent to P1.79 billion in the first quarter from P1.34 billion in the same quarter last year as provision for impairment, credit and other losses fell by 37.5 percent to P2.09 billion from January to March compared to P3.35 billion in the same period last year.

PNB expects a 51 percent jump in net income this year after a major slump last year.

The assets of the Tan-led bank stood at P1.13 trillion as of end- March. This translated to a higher capital adequacy ratio (CAR) of 14.77 percent from 14.72 percent and common equity tier 1 (CET-1) ratio of 14.11 percent from 13.8 percent, both above the minimum thresholds set by the Bangko Sentral ng Pilipinas (BSP) at 10 percent and the Bank for International Settlements (BIS) at eight percent.