Tycoon Lucio Tan’s banking units Philippine National Bank and Allied Banking Corp. expect to consummate their merger by 2012 after resolving the remaining stumbling block to the much-delayed union.
“Both Allied Bank and PNB are working out the details of the merger, which we anticipate will realistically happen next year,” Allied Bank told the Philippine Stock Exchange on Friday.
Allied Bank recently obtained approval from US banking regulators to cede its 27.8-percent stake in Oceanic Holdings (BVI) Ltd. to an independent trustee while divestment was being worked out. Oceanic Holdings owns niche US bank Oceanic Bank based in San Francisco, California.
The US Federal Reserve earlier required Allied Bank to unload its stake in Oceanic before giving its consent to its merger with PNB. But now, an agreement to put the stake in escrow for eventual sale satisfied the US banking regulator.
“In view of the foregoing, we wish to inform that Allied Bank will no longer seek to increase the issuance of shares to comply with the required 10-percent public float as the same will be rendered moot and academic by the merger,” the disclosure said.
Allied Bank itself has zero public float but PNB, which will be the surviving entity in the merger, has sufficient public ownership of 33 percent.
The US Fed approved on Oct. 28 a voting trust agreement, which will allow Allied Bank to place shares of Oceanic Holdings in a temporary trust in order to facilitate the merger “in a manner that addresses US regulatory concerns.” The independent trustee will be charged with voting the shares of Oceanic and arranging for the sale of the shares to an unrelated third party or parties acceptable to the Fed.
It was earlier reported that the Lucio Tan group had nominated Walter Mix III as the independent trustee. PNB, as successor in interest in Oceanic Bank upon merger, will assume all rights and responsibilities under the voting trust agreement.
Since the announcement of the plan of merger in 2008, both banks have made significant progress on the following: synchronization of information technology systems, alignment of products and processes, human resource development and branch rationalization and expansion. But because the merger will be done through a share swap, valuations have changed from the time the plan of merger was announced.
After the merger, PNB is expected to fortify its position as the fourth-biggest domestic bank in terms of total assets. It will also have the most extensive distribution network with the largest international footprint among local banks.