PSE Circular for Brokers No. 1935-98

August 20, 1998 PSE CIRCULAR FOR BROKERS NO. 1935-98 August 19, 1998 Philippine Stock Exchange PSE Center, Exchange Road Ortigas Center, Pasig City Attention: Mr . Reynold P . Ong Vice President Listings & Disclosure Group Gentlemen : We wish to advise the Philippine Stock Exchange that the Philippine National Bank will release today for publication in leading newspapers the attached press statement on the loan to " RJ Ventures ". Very truly yours, Press Statement : The possible loss that PNB will incur from the loan deal with businessman Ramon Jacinto is currently being evaluated by our external auditors, SGV & Co. and by an independent real estate appraisal company. The earlier estimate of the losses (as reported by the Philippine Daily Inquirer) amounting to P4.5 billion is a worst case figure in a range of alternative scenarios arrived at by taking into account the effects of the devaluation of the peso against the U.S. dollar on the $112 million loan and, certain assumptions on price movements in the Philippine real estate property markets. cdlex It is not a likely figure at this point in time. The point to remember is that there was no real net money disbursed by PNB to the real estate company of Mr. Jacinto. Instead, funds flowed into PNB's account as a result of the down payment received from RJ Ventures. In the event of default, PNB has the option to foreclose the property, together with the other collateral offered by Mr. Jacinto to secure the loan, and retake possession of it for appropriate disposition in the future.