MANILA, Philippines - The long-delayed merger of tycoon Lucio Tan's two commercial banks, Philippine National Bank (PNB) and Allied Banking Corp., has finally gotten the green light from the Philippine Deposit Insurance Corp. (PDIC).
In a disclosure to the stock exchange, PNB said it has received notice from the PDIC that it has given its approval for its merger with Allied Bank.
"We would like to inform the Exchange that we received today an advice from the PDIC granting consent to the proposed merger of the PNB with Allied Bank, with PNB as the surviving entity, pursuant to Sec. 21c of R.A. 3591, as amended (PDIC Charter), subject to certain conditions," it said.
However, the banks still need to secure approval from the Bangko Sentral ng Pilipinas and the Securities and Exchange Commission (SEC).
PNB and Allied are the sixth- and 12th-largest banking groups in the Philippines by assets, as of end September 2011. After the merger, they would form the 5th largest banking group with estimated market share of 6% of system loans and 8% of system deposits.
Tan founded Allied, now the country's 13th largest lender, in 1977. He bought PNB in 2000 but his stake was reduced in 2002 when the government converted emergency loans into equity. He regained majority when he won the bidding for the government's stake in 2005.
Plans to merge the two lenders have been held up by the US Federal Reserve, which required Allied to sell a California subsidiary. The Fed in October agreed to let the merger go through if Allied put the unit in escrow until a sale can be done.
The Presidential Commission on Good Government also opposed the merger, saying it would render government efforts to recover a portion of Tan’s allegedly ill-gotten wealth moot and academic. But the Department of Justice (DOJ) said the PCGG has no authority to stop the merger of the 2 banks.
Earlier, New York-based Moody's Investors Service said the merger of the two banks is a credit positive for PNB.