Philippine National Bank

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The Philippine National Bank (PNB) was established by the Philippine government on July 22, 1916, during the American colonial period, and became the first universal bank in the Philippines in 1980. It was privatized in 1989. PNB currently has over 100 branches throughout Asia, Europe, the Middle East and North America.

History

The Philippine National Bank was established as a government-owned banking institution on July 22, 1916. Its primary mandate was to provide financial services to Philippine industry and agriculture and support the government's economic development effort. World War I, then raging in Europe, generated huge demand for the country's major exports namely: sugar, copra, coconut oil, Manila hemp and tobacco. However, not much was being done to develop the industries that produced these sought-after crops since access to credit facilities was limited. To solve this problem, Henderson Martin, Vice Governor of the Philippines, together with Miguel Cuaderno (who later became Central Bank governor) drafted a charter for a national bank.

On February 4, 1916, Public Act 2612 was passed by the Philippine Legislature providing for the establishment of PNB to replace the small P1 million government-owned Agricultural Bank. PNB's first head office was the Masonic Temple along Escolta, Manila, the then "Wall Street of the Philippines" in the bustling district of Sta. Cruz in Manila. An American, H. Parker Willis, was its first president.

With PNB's establishment, Filipinos had a bank of their own. PNB was authorized to grant short and long-term loans to agriculture and industry. Filipino farmers then could avail of loans with interest between 8% to 10% per annum. PNB was also authorized to receive deposits, open foreign credits and rediscount bills.

On July 24, 1916, PNB established its first branch in Iloilo. In 1917, PNB opened its first non-Philippine branch in New York. The following year, it established five more domestic branches and another outside the Philippines in Shanghai, China.

PNB as de facto Central Bank and National Treasury

PNB has also functioned as the de facto Central Bank of the Philippines until 1949. It was given the special power to issue circulating notes.

PNB briefly ceased operations in January 1942 but reopened the next month under the supervision of Japanese authorities. After the Second World War, PNB reopened immediately and acquired the assets and assumed the liabilities of the banking division of the National Treasury.

With the establishment of the Central Bank in 1949, PNB's role as issuer of currency notes, custodianship of bank reserves, sole depository of government funds and clearing house of the banking system ceased.

PNB launched first on-line Electronic Data Processing System in the Far East

In 1955, it was authorized to operate as an investment bank with powers to own shares and to issue debentures. In 1963, it established the National Investment and Development Corporation to engage primarily in long-term and equity financing of business ventures.

PNB transferred to its new Head Office along Escolta in 1966 and launched the first on-line Electronic Data Processing System in the Far East.

Between 1967 and 1979, PNB opened offices in London, Singapore, Jakarta, Honolulu and Amsterdam, and 14 provincial branches. It also started the Dollar Remittance Program.

In 1980, PNB became the first universal bank in the country. However, it encountered difficulties in the mid-80s as a result of the economic downturn triggered by the assassination of Senator Benigno S. Aquino, Jr and in 1986 received assistance from the government.

Privatization of PNB

The privatization started in 1989 when 30 per cent of its shares were offered to the public and it was listed on the stock exchange.

In 1992, PNB became the first Philippine bank to reach P100 billion in assets. Later that year, privatization continued with a second public offering of its shares.

In 1995, PNB moved to its headquarters to the PNB Financial Center, Roxas Boulevard, Pasay City. In 1996, the Securities and Exchange Commission approved the Bank's new Articles of Incorporation and by-laws and the change in the status of PNB from a government-based to a private corporation with the control of the government reduced to 46 per cent.

A New Beginning

In early 2000, the Lucio Tan Group became the single biggest private stockholder. In less than one year, the group pumped nearly P20 billion of fresh capital into the bank.

In late-2000, when PNB suffered huge withdrawals, mainly from the government accounts, the government provided P25 billion in financial aid..

In May 2002, the Philippine government and Lucio Tan signed an agreement to swap the government's loans to shares. The accord increased the government's stake to 45 percent from 16 percent and reduced Lucio Tan's holding to 45 percent from 67 percent. [1] Lucio Tan and the government also agreed that year to sell three-quarters of their combined stake within five years.

Following the Senior Management’s Good Bank-Bad Bank strategy, PNB finally posted an income of P52 million (as restated from an earlier reported figure of P168 million, due to changes in Generally Accepted Accounting Principles) in 2003, after several years of being in the red. The bank was able to repeat this feat and reported an income of P353 million by end-2004.

In August 2005, PNB was fully privatized. The joint sale by the Philippine government and the Lucio Tan Group of the 67% stake in PNB was completed within the third quarter of 2005. The Lucio Tan Group exercised its right to match the P 43.77 per share bid offered by a competitor and purchased the shares owned by the government. The completion of sale is expected to speed up the development of PNB’s franchise and operational competitiveness.

Despite being fully privatized, PNB will remain to be a government depository bank until May 3, 2007.

PNB Today

PNB was won by a string of recognition and awards. The bank won two awards from the Social Security System’s Balikat ng Bayan Awards 2005 in two categories: Best Collecting Commercial Bank for Overseas Filipino Workers’ Remittance; and for the second consecutive year, as the Best Paying Commercial Bank, for servicing the accounts of SSS pensioners through its extensive domestic network of branches. PNB was voted by the consumers for the second consecutive year as certified Gold Superbrand from the joint survey of the venerable international publication, Reader’s Digest, and global media research giant, ACNielsen, along with a host of other brand leaders in the consumer product categories.

PNB maintains remittance centers in the United States, Canada, England, Spain, the Netherlands, France, Germany, Austria, Italy, Hong Kong, Japan, Singapore, Malaysia and the Middle East.

PNB has also stepped up its marketing efforts to overseas Filipino workers with its PNB Global Filipino Money Card.

Complementing PNB's banking activities are its subsidiaries like PNB General Insurers, a non-life insurance company; PNB Capital, an investment bank; PNB Securities, a stock brokerage outfit and PNB Forex, which engages in foreign exchange trading. It also has a majority stake in PNB-Japan Leasing Corp. For life insurance requirements of PNB clients, it has a substantial equity stake in Beneficial PNB Life.

External links

• Philippine National Bank website