PNB-Allied merger to push through by February

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Taipan Lucio Tan has secured the last local and foreign regulatory approvals needed to finally merge by next month his banking arms Philippine National Bank and Allied Banking Corp.

The Financial Services Authority of the United Kingdom has approved the change in control of Allied Bank Philippines (UK) Plc and PNB (Europe) Plc in relation to the upcoming merger of their parent banks, PNB disclosed to the Philippine Stock Exchange on Friday.

At the same time, the Securities and Exchange Commission has approved the merger and the corresponding amendment to PNB’s bylaws reclassifying PNB’s authorized preferred shares into common shares and increasing the number of directors to 15 from 11.

“Thus we now have all the necessary regulatory approvals to implement the legal merger by February 2013,” the disclosure said.

The merger, where PNB will be the surviving entity, is seen creating the country’s fourth largest private bank and generating more than P1 billion in yearly cost savings for the banking unit of tycoon Lucio Tan.

It was earlier estimated that full integration would likely happen 18 months after first executing the merger.

The combined entity will have a distribution network of over 650 branches nationwide and total assets of over P514 billion, the fifth-largest among local banks (including Land Bank) and the fourth among privately owned lenders.

It will also have the largest international footprint across the Asia-Pacific region, Europe, the Middle East and North America. PNB also aims to regain leadership in the remittance business.

As part of the consolidation, all the issued and outstanding common shares of Allied Bank will be converted to common shares of PNB at a ratio of 130 PNB common shares for each issued Allied Bank common share.

All the issued and outstanding preferred stocks of Allied Bank will also be converted to PNB common shares at a ratio of 22.763 PNB common shares for each issued Allied Bank preferred share.

To do this, PNB shareholders approved last year the reclassification of 195.17 million authorized preferred shares into common shares, thereby increasing the company’s authorized common stock to 1.25 billion.

Thereupon, the bank will issue 423.96 million new PNB common shares out of its authorized and unissued capital stock to swap for the outstanding Allied Bank common shares and preferred shares.

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