The Early Years
The Philippine National Bank was established as a
government-owned banking institution on July 22, 1916 with headquarters
in the old Masonic Temple along Escolta, Manila. 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 then. To solve this problem, Henderson Martin,
Vice Governor of the Philippines, together with Mr. Miguel Cuaderno
(who later became Central Bank governor) drafted the charter for a
In February 4, 1916, Public Act 2612 was passed by the
Philippine legislature providing for the establishment of the PNB to
replace the small P1 million government-owned Agricultural Bank. PNB's
first head office was the Masonic Temple along Escolta, 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.
"The First Universal Bank in the country"
With PNB's establishment, Filipinos found a bank of their own. PNB was
authorized to grant short and long-term loans to agriculture and
industry. The 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. It was also given
the special power to issue circulating notes. As such, PNB functioned
as the de facto Central Bank of the country until 1949.
On July 24, 1916, PNB established its first branch in Iloilo.
In 1917, PNB marked its entry in the field of international banking
when it opened its New York Branch. The following year, it established
five more domestic branches and another overseas branch in Shanghai,
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
"PNB launched the first on-line Electronic
Data Processing System in the entire 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
PNB transferred to its new Head Office along Escolta in 1966 and
launched the first on-line Electronic Data Processing System in the
entire Far East.
Between 1967 and 1979, PNB continued to expand its operations by
opening offices in London, Singapore, Djakarta, Honolulu and Amsterdam.
In the domestic field, it opened 14 provincial branches. It was also
during this period that the Bank started the Dollar Remittance Program.
In 1980, PNB became the first universal bank in the country. However,
it encountered operational difficulties in the mid-80s as a result of
the economic downturn triggered by the assassination of Senator Benigno
S. Aquino, Jr and had to be assisted by the government in 1986.
Privatization of PNB
The privatization of the Bank started when 30 per cent of its
outstanding stocks was offered to the public and its stocks were listed
in the stock exchange in 1989.
In 1992, PNB became the first Philippine bank to reach the P100 billion
mark in assets.
Also in 1992, a second public offering of its shares was issued to
continue its privatization.
In 1995, the Bank moved to its new headquarters at the PNB
Financial Center in Roxas Boulevard, Pasay City.
PNB is the bank for the Filipino wherever he or she may
be-- in the country's centers of commerce and industry, in the far
reaches of the countryside, and even in
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. At the turnover rites on July
23, 1996, President Fidel V. Ramos declared:
many places across the globe."
A New Beginning
In 1999, a group of new private stockholders led by Dr. Lucio
C. Tan acquired approximately 35% of the total outstanding capital
stock of PNB. In early 2000, the group increased its share in
the Bank to 69.32% and pumped in nearly P20 billion fresh capital in
less than one year. This was done to emphasize the commitment of the
new stockholders to the improvement of the Bank's financial condition,
which had been incurring losses in operations due to poor asset quality.
In late 2000, the Bank suffered a liquidity crisis and the National
Government stepped in to support the Bank by implementing a capital
restructuring and injecting P25 billion in liquidity assistance.
In May 2002, the Government and the Lucio Tan Group, representing the
group of private stockholders, sealed the Memorandum of Agreement (MOA)
that embodied the provisions that would help turn the Bank around. It
included, among others, the settlement of Government's liquidity
assistance by way of increasing the Government's stake in the Bank from
16.58% to 44.98%, in effect reducing the group’s share from 68% to
44.98%. At the same time, the Bank started operating under a
5-year rehabilitation program.
In August 2005, the Government, as part of its privatization program,
sold down its 32.45% stake in the Bank via an auction. The private
stockholders represented by the Lucio Tan Group exercised their right
of first refusal, reducing the Government’s share to 12.5% and raising
the group’s to a total of 77.43%.
In June 2007, PNB settled its P6.1 billion loan to Philippine Deposit
Insurance Corporation (PDIC), more than four years ahead of the loan’s
due date. The loan repayment was a clear indication of the
Bank’s renewed financial health.
In August 2007, the Bank completed its Tier 1 follow-on equity offering
where it raised about P5.0 billion in Tier 1 capital. Together with the
sale of 89 million primary shares, 71.8 million secondary shares owned
by the National Government through PDIC and DOF were sold to the
public, thus bringing about a complete exit of the Government from PNB.
Since the inception of the rehabilitation program, PNB exceeded the
targets of the program. While the program called for profits
starting 2005, the Bank became profitable as early as 2003.
Within four years, PNB increased its net income sixteen times from P52
million in 2003 to P820 million in 2006.
With its successful exit from the Government’s Rehab program and the
strong income performance, PNB has demonstrated its ability to sustain
its heightened competitiveness based on the three tenets of reducing
non-performing assets, strengthening core businesses and increasing
The Bank remains as one of the largest banks in the country with a wide
array of competitive banking products to answer for the diverse needs
of its huge clientele including more than 2 million depositors.
PNB maintains its leadership in the overseas remittance business with
remittance centers in the United States, Canada, London, France, Italy, Hong Kong, Japan,
Singapore and the Middle East countries.
Through its subsidiaries, the Bank also engages in a number of
diversified financial and related businesses such as remittance
servicing, investment banking, non-life insurance, stock brokerage,
leasing and financing and foreign exchange trading. The Bank,
through its affiliate, is also engaged in other services such as life