Billionaire Lucio Tan’s bank brings forward property listing

Pedestrians wearing protective mask walk near the Philippine National Bank (PNB) Center in Makati City, Metro Manila, the Philippines, on Monday, July 27, 2020. Billionaire Lucio Tan’s PNB brought forward its plan to list its property unit, now aiming to float the asset by the end of this year. (Photo: Geric Cruz/Bloomberg)
Pedestrians wearing protective mask walk near the Philippine National Bank (PNB) Center in Makati City, Metro Manila, the Philippines, on Monday, July 27, 2020. Billionaire Lucio Tan’s PNB brought forward its plan to list its property unit, now aiming to float the asset by the end of this year. (Photo: Geric Cruz/Bloomberg)

By Ian Sayson and Ditas Lopez

Billionaire Lucio Tan’s Philippine National Bank (PNB) brought forward its plan to list its property unit, now aiming to float the asset by the end of this year to boost capital.

That puts the listing of PNB Holdings Corp. ahead of the original 2023 schedule and will generate about 10 billion pesos ($194 million) of additional capital, President and Chief Executive Officer Wick Veloso said in an interview.

“As we continue to aspire for growth, we are going to need capital,” Veloso, 56, said. The lender had plans that didn’t push through because it was held back by its nonperforming loans, and “we need to resolve our NPL issue first before we can proceed.”

The rejigged plans at the firm that was once the country’s biggest bank comes as Tan’s business portfolio grapples with the aftermath of the pandemic shock that also sent its airline into bankruptcy.

Veloso, who was CEO of HSBC Holdings Plc’s Philippine unit before joining PNB, said he also hopes to increasingly wind back almost 30 billion pesos of remaining provisions that the Tan-owned lender set aside during the Covid-19 crisis. Listing the PNB Holdings unit will help unlock the value of key properties, paving the way for a resumption of the bank’s search for a strategic investor to help grow retail lending, he said.

PNB’s share price has lagged the Philippine Stock Exchange Index’s more than 50% rebound from its pandemic nadir in March 2020.

Other Insights

  • Excluding acquired assets, provisions and one-off items, PNB can sustain an ROE of at least 7% in the next three years and could reach 10% this year

  • In three years, Veloso seeks to cut the share of large corporates to 25% from 66% currently and raise retail, which provides fatter margins, from 9% to 25%

  • A key to boosting profitability is to raise its net interest income margin by increasing low-cost funds through PNB’s cash management services

Still, foreign investors have continued to ask him about Tan’s successor ever since the death of the tycoon’s expected heir Lucio Tan Jr. in November 2019, Veloso said.

“I have insulated the bank as much as possible,” he said, adding “that’s a question I can’t answer” and a matter that only Tan and his family can decide.

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