RCBC set to acquire credit-card pioneer Bankard Inc.

By Honey Madrilejos-Reyes
Reporter

AFTER its negotiations with GE Consumer Finance bogged down, the Yuchengco-led Rizal Commercial Banking Corp. (RCBC) said Tuesday it would acquire credit-card service provider Bankard Inc.
           
RCBC had earlier planned to sell Bankard, a member of the Yuchengco Group of Companies (YGC), to GE.
           
In a disclosure to the stock exchange Tuesday, RCBC said its board has authorized to purchase “all or substantially all of the assets and liabilities of Bankard subject to approval by the Bankard board and its stockholders in the special stockholders’ meeting scheduled on December 27, and subject further to approval by the Bangko Sentral ng Pilipinas (BSP).”
           
The disclosure, however, did not, however, indicate the cost of the transaction.
           
RCBC has also proposed to make a P1-billion capital infusion into Bankard, subject to the approval of the BSP.
           
The negotiations between RCBC and GE reportedly failed, not because of pricing issues, but because of a noncompeting clause preventing RCBC from running a credit-card unit and directly competing with Bankard.
           
RCBC had earlier announced plans to set up another credit company, a few years after the proposed sale of Bankard to GE.
           
A pioneer in the Philippine credit card industry, Bankard was established in 1981 as the Philippine Commercial Credit Card Inc. (PCCCI), operating a domestic credit-card operation, which started full commercial operations in June 1982.
           
After 10 years, PCCCI changed its name to Bankard Inc.
           
In May 2000, Bankard became a member of YGC after RCBC acquired 67 percent of the company’s shares through RCBC Capital Corp.
           
As of end-September this year, Bankard’s had posted losses amounting to P571 million, higher by P258 million compared to the amount posted in the same period in 2005. The increase in the losses was primarily due to the booking of higher additional valuation reserves, in the amount of P272 million, as required by the BSP.
           
This was coupled with the nonrecognition of deferred tax assets on credit provisions effective January 2006.
           
Its diversification into so-called card-not-present transactions, or those where neither the card nor the cardholder is present at the point-of-sale (e.g. over the Internet, by mail, telephone or fax), combined with selective card-present transactions, is generating new fee income expected to contribute to Bankard’s returning to profit.
           
Last year, Bankard’s net merchant discounts reached P173.3 million, a growth of 91 percent or P71.2 million from year-ago figures. In the third quarter this year, merchant discounts grew by P50.5 million or 232 percent over the same period last year.
           
Its January-to-September 2006 merchant discounts grew by P122.6 million or 149 percent from the previous year.
           
Year-to-date September 2006 billings ended at P5.5 billion, an 8-percent growth compared to year-to-date September 2005.
           
Bankard also reported a total of 335,529 cards as of end-September this year.
           
Among the three major brands issued by the company, MasterCard contributed more than 49 percent to total cards, followed by JCB with 27 percent of the total pie.
           
RCBC shares on Tuesday shed 2.94 percent to close at P24.75. On the other hand, Bankard shares last traded on November 27, 2006 at 82 centavos.

Business Mirror

November 29, 2006