Bilyonaryo Lucio Tan got a free pass from Bangko Sentral ng Pilipinas to push through his much needed plan to liquidate his bank’s idle properties amid its rising bad loans.
Tan’s Philippine National Bank revealed that the BSP led by Governor Ben Diokno granted its request for “temporary exemption from prudential limits on its equity investments in PNB Holdings Corporation.”
The exemption would enable PNB to swap its prime but low-earning properties for an additional P46.68 billion stake in its wholly-owned subsidiary, PNB Holdings.
Without the exemption, PNB’s alternative is to sell outright the prime properties – the bank’s 10-hectare head office in Pasay City, the Allied Bank building at Ayala Avenue and the 8,000-square-meter parking lot along Gil Puyat Avenue. Apparently, Tan prefers to retain some stake in these properties rather than sell them outright.
PNB Holdings was formed in 1920 as Philippine Exchange Co., Inc. It was converted into a holding company in 1991 to focus on the insurance business.
Last year, PNB Holdings exited from the business by selling its 34.25 percent stake in PNB General Insurers to the insurance subsidiary of Tan’s other bank, Allied Bank.
The divestment is seen as step one of Tan’s plan to convert PNB Holdings into a P50 billion property holding firm ripe for a partnership with a giant property developer better suited to unlock these assets’ potential.
PNB needs more liquidity as its bank president, Wik Veloso, expects the bank’s non-performing loans (NPLs) to peak in the first quarter of 2021. PNB’s loan loss provisions have ballooned to P9 billion as of the third quarter of 2020, or six times year ago levels.