Fitch affirms Philippine National Bank

Fitch Ratings said it affirmed Philippine National Bank's ratings at individual E and support 3 following the recent announcement that the Lucio Tan group had raised its ownership of the bank to a controlling 79% stake after winning a competitive bidding process for a 34% stake from the government.

Fitch's individual rating on the bank reflects its weak balance sheet with its high level of non-performing assets, which are in turn a legacy of the government's direction of the bank's lending during the 1980s and 1990s and the subsequent Asian economic crisis.

Fitch noted that a merger between Philippine National Bank and Allied Bank (rated individual D, support 4 and ranked 10th by assets) would render the merged entity the third-largest bank in the Philippines, enlarging the branch network and franchise somewhat and improving economies of scale for greater efficiency.

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