LT group to buy 60% of PNB rights offer

The Lucio Tan group has committed to take up 60 percent of Philippine National Bank’s stock rights offering, supporting its recapitalization and keeping its controlling interest in the banking unit.

In a disclosure to the Philippine Stock Exchange, PNB said it had received commitment from LT Group Inc. to subscribe through its holding companies to at least 97.8 million out of 163 million new common shares to be issued through a stock rights offering worth about P15 billion.

The commitment is equal to LTG’s entitlement to the offering, which represents about 15 percent of PNB’s outstanding shares at present. The new shares will be issued from PNB’s authorized but unissued stocks.

The funding exercise is meant to strengthen PNB’s capital base as the bank seeks to “expand and deepen lending capabilities to more fully address the fast-growing Philippine economy, including the needs of its burgeoning consumer segment.”

PNB has mandated foreign banks Credit Suisse and Deutsche Bank to act as joint international lead managers and underwriters. PNB Capital and Investment Corp. is the sole domestic underwriter.

Universal and commercial banks are required by the BSP to adopt by Jan. 1, 2014, the capital adequacy standards under Basel 3, which introduces a complex package of reforms designed to improve the ability of banks to absorb losses, extend the coverage of financial risks and have a stronger firewall against periods of stress.

This recapitalization program is seen to allow PNB to maintain a core or tier 1 capital adequacy ratio of 15 percent of risk assets and overall CAR of 18 percent. It is also estimated to boost PNB’s public ownership.

Under the bank’s five-year strategy, PNB has set as guidance a compounded annual growth rate (CAGR) of at least 15 percent, which will effectively double its net profit in five years. Also a part of the plan is to grow its loan book by an average CAGR of 18 percent for the next five years.

As of end-September, LTG has obtained majority ownership over certain bank holding companies that collectively own direct ownership interest of 48.6 percent of the merged PNB-Allied Bank. As of Nov. 8, LTG has obtained regulatory approval from the Hong Kong Monetary Authority to become a majority shareholder controller of Allied Banking Corp. (Hong Kong) Ltd. and took note of the plan of LTG to acquire or increase its shareholdings in PNB up to 59.9 percent.