Banco de Oro may yet become No. 1

Monday, January 09, 2006
Manila Times
http://www.manilatimes.net/national/2006/jan/09/
yehey/business/20060109bus1.html

Banco de Oro may yet become No. 1
By Maricel E. Burgonio, Reporter

THIS time, it’s China Bank. If it concludes its merger with Equitable-PCIBank (EPCIB), the bank led by retail tycoon Henry Sy said that it may acquire China Banking Corp., dislodging Metropolitan Bank and Trust Co. as the Philippines’ top commercial bank in terms of assets.

“It’s possible to merge with China Bank but it’s not being contemplated by board at the moment,” said Nestor Tan, Banco de Oro (BDO) president, in a recent briefing.

While Metrobank currently holds the industry’s top position with P478 billion in assets, the combined assets of seventh-ranking BDO, third-ranking EPCIB and tenth-ranking China Bank will amount to P646 billion.

BDO’s acquisition of a majority stake in EPCIB will open the doors for another possible merger with China Banking Corp., given their common controlling shareholder. Henry Sy, together with other firms which he controls, has a majority stake of 49.28 percent in China Bank.

Last week BDO submitted a merger offer to the EPCIB board, offering its shareholders 1.6 BDO shares for every share held in their own bank. The Sy-led bank purchased the Go family’s 24.7-percent stake in EPCIB last year.

The proposed merger of Banco de Oro and Equitable-PCI will push the surviving entity to the third spot, in terms of resources, among local commercial banks.

Moreover, the new entity will move up to large capitalization category, defined as companies with market cap of at least $700 million.

Earlier, BDO also expressed interest in acquiring the respective stakes of Government Service Insurance System (GSIS) and Social Security System (SSS) in EPCIB.

GSIS has a 12-percent share in EPCIB while SSS holds a 28-percent stake.

Earlier, BDO offered to buy SSS’ stake in EPCIB for P43.50 a share, but the deal fell through after a group of pensioners secured a restraining order from a local court.

Monetary authorities have been encouraging banks to consolidate, intending to create fewer but financially strong institutions.