BDO-EPCIB merger overwhelmingly approved

By Honey Madrilejos-Reyes

Reporter 

IT only took close to half-an-hour to create the Philippines' second-largest bank.

On Wednesday, the respective shareholders of Banco de Oro Universal Bank and Equitable PCI Bank Inc. approved the merger of the two entities in separate special stockholders' meeting, paving the way for the creation of Banco de Oro-Equitable PCI Bank Inc. (BDO-EPCIB).

BDO, which started its special stockholders meeting Wednesday at 10:10 a.m. at the Makati Shangri-La Hotel, wrapped up the proceedings after 20 minutes. On the other hand, the EPCIB board, which scheduled its own special stockholders meeting at 3:05 pm at the Santiago Hall of the EPCIB Tower I also in Makati City, cemented the deal in just seven minutes, a clear indication that 94.38 percent of the voting shares recorded were in favor of the consolidation.

"What's next for us is the most challenging part, which is the integration of the two banks," said Teresita Sy-Coson, chairman of BDO and the one who led the two lenders' consolidation.

The integration of the banks' networks will entail spending, and Sy-Coson assured they have the resources to support the procedure. The integration is expected to be completed in 2008.

The merged entity will create the second largest bank in terms of total assets; third biggest in net loans, second in deposits and third in branch network. At present, Metrobank is considered as the country's largest bank, followed closely by the Bank of Philippine Islands.

 "There was no intention at all to become the biggest lender here. We needed to expand at that time and we saw the opportunity to grow. If we can be the most efficient institution, that's more important to us than being number one," Sy-Coson said.

She added that what she wanted the merged entity to achieve was to keep market-leading positions in its core business lines, including corporate and middle-market banking, consumer banking, credit cards, assets management, remittances, leasing and finance.

The respective boards of directors of BDO and EPCIB approved the merger plan of the two entities on November 6, effecting the largest merger in Philippine banking history.

Completion of the transactions is subject to regulatory approval and is expected to close by the first quarter of 2007.

The combination will be structured as a merger and executed by means of a share-for-share exchange. Under the terms, BDO will serve as the surviving entity and EPCIB shareholders will receive 1.80 BDO shares for every EPCIB share.

BDO-EPCI have a combined total assets of P613 billion, based on end-September 2006, data of each of the two banks, and market capitalization of about P106 billion based on the lenders' closing prices as of Wednesday.

Meanwhile, BDO president Nestor Tan said the combined company is expected to realize substantial revenue and cost synergies in the coming years.

"There will be greater opportunities to expand fee-based income and cross-selling potential through the combined banks' expanded product offering and customer base and through the SM Group network. The combined entity also expects to increase its low-cost deposit gathering capabilities through its larger distribution network," he said.

Business Mirror
December 28, 2006