Banco de Oro folds in credit card firm

Banco de Oro folds in credit card firm
Sat Jan 14,2006
Manila Bulettin
http://www.mb.com.ph/BSNS2006011453771.html#

Banco de Oro Universal Bank (BDO) owned and controlled by retail magnate, Henry Sy, Sr., is dissolving its credit card subsidiary, BDO Card Corporation (BDOCC), a move that would increase the bank’s capital base.

BDO management, in a disclosure to the Philippine Stock Exchange, said the "dissolution" of BDOCC will be undertaken by "shortening its corporate life," through the amendment of its articles of incorporation.

Instead of a separate entity, BDOCC will envisioned, if its dissolution is approved by the regulators, to be just be a part of the overall operations its mother company, BDO.

"Recognizing the potential for growth and profitability of credit card business in the Philippines, BDO has decided to fold in and directly operate its credit card business as a department of the bank. The consolidation of the credit card business with the moth! er bank will lead to enhanced efficiency, substantial synergies and cost savings," BDO said.

Analysts believed that the collapse of BDOCC into a mere department is part of the overall strategy of the Sy family to beef-up the resources and capital base of BDO, in step with its plan to improve the bank’s industry standing for being just a mid-sized universal bank.

This is the tack that will be taken by most banks with separate or whollyowned credit card firm to improve its resources and capital in the wake of their compliance to the international accounting ! standard of financial reporting, explained market analysts.

The resulting dissolution will transfer all the BDOCC assets as well as its liabilities to BDO. "BDO assures its clientele and business partners of a seamless transition of its credit card operations from BDOCC to BDO," said the management.

"The planned transfer of business and the clientele of BDOCC to its mother bank, BDO is in line with the strategic thrust of the BDO Group towards expansion in the credit card business," the bank added.

BDOCC operates BDO credit card, SM credit card and has been licensed to issue American Express Card to a select group of clients.

Increasing BDO’s capital base is a necessary step following the bank’s to merge with Equitable-PCI Bank through a share swap arrangement of 1.6 to 1 ratio. BDO has given EPCI Bank directors until end of the month to decide.