Lucio Tan wins key sequestration cases

By: Levensloopregeling.Cn Krediet En Lijfrente  12/08/2007
Keywords: philippines, Web Development, Printing Services

Lucio Tan wins key sequestration cases By Eileen A. Mencias THE Philippine National Bank and Allied Banking Corp., both controlled by billionaire Lucio Tan, are to merge after a court order yesterday ended a 21-year ownership dispute over his stake in one of the two banks. The Supreme Court gave Tan, the nation’s third-richest man, ownership of Allied Bank and other assets. The Presidential Commission on Good Government, the state agency tasked to recover so-called ill-gotten assets, earlier sought ownership of Tan’s Allied Bank stake and other holdings. The merger would allow Tan, 73, to overtake Land Bank of the Philippines as the country’s fourth-largest bank by assets, extending an empire that also includes the nation’s biggest carrier. The merger, expected next year, would help PNB compete more effectively, company president Omar Mier said. Tan’s plan “makes perfect sense because it will give the merged entity more scope to lever up in terms of efficiency and access to low-cost funding,” said Ed Bancod, head of research at ATR-Kim Eng Securities in Manila. The combined bank would have P370.7 billion in assets compared with state-owned Land Bank’s P367.8 billion, central bank data show. PNB surged 7.6 percent to P49.50 as of the noon end of trading in Manila, its biggest gain in more than five months. “The merger will create a bigger, stronger and more profitable bank,” Mier said. The union would create the nation’s fifth-biggest bank in terms of capital, up from sixth currently, he said, but declined to give further details on the transaction. PNB’s profit was 4.3 percent of sales last year, the lowest margin among 16 publicly traded banks in the country, according to data compiled by Bloomberg. The stock has risen 13 percent this year, trailing a 26-percent increase in the benchmark index. Reynaldo Maclang, president of closely held Allied Bank, said both banks would have to submit merger proposals to a stockholders’ vote. Whatever plans they had would have to be re-evaluated in light of the Supreme Court ruling, he said. The groundwork for the merger was laid three years ago. The two banks coordinate closely in buying new systems to make sure they are compatible. The two banks have also defined the areas they will service to avoid duplication of branches. The court decision, announced in the court order released yesterday, also gives Tan control over Fortune Tobacco Corp., the biggest tobacco maker in the Philippines. The outcome cements Tan’s reach in the economy, where he also owns Philippine Airlines Inc. and Asia Brewery Inc. In its ruling yesterday, the Supreme Court said the government showed no evidence that Tan’s properties were ill-gotten, or that the late President Ferdinand Marcos had intervened in their acquisition. Associate Justice Angelina Sandoval Gutierrez wrote the decision, with Associate Justices Consuelo Yñares Santiago and Renato Corona concurring. Chief Justice Reynato Puno took no part in the deliberations because of his participation in a related case, while Associate Justice Adolfo Azcuna inhibited himself because he used to be chairman of the PCGG.

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