More bank M&As seen in 2013

By Ann Rozainne R. Gregorio, BusinessWorld Online

http://www.bworldonline.com/content.php?section=Finance&title=More-bank-M&As--seen-in-2013&id=64984


SIXTEEN banks are now in search of acquisitions, indicating that more consolidations in the local banking sector are forthcoming.

"There were 22 active registrants in the PDIC Investor-Investee Helpdesk as of end-2012," said Jose G. Villaret, Jr., vice-president for corporate affairs at the Philippine Deposit Insurance Corp. (PDIC), in an e-mail to BusinessWorld.

Of the 22, Mr. Villaret said, 16 were investors scouting for other banks to swallow while six were investees looking for new investors.

Mr. Villaret declined to name these 22 due to confidentiality agreements but shared that all investees were rural banks while investors were composed of commercial, thrift and rural banks.

Sought for comment, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Nestor A. Espenilla, Jr., in a text message yesterday, said: "This is a good sign of investor interest in mergers and acquisitions, which supports the industry's consolidation."

He said mergers and acquisitions are favorable for the industry as they will create "stronger banking entities."

The Investor-Investee Helpdesk is a a facility set up by the PDIC in Jan. 2010 to assist banks seeking investors, and banks that are looking to acquire or consolidate with another bank.

Under the Helpdesk's implementing guidelines, operating banks and non-bank financial institutions are qualified to enroll provided they have not violated any of PDIC's regulatory issuances and they are not under the BSP's prompt corrective action.

Banks are not allowed to apply as an investor and investee at the same time. They do not pay any fee upon enrolling in the Helpdesk.

An investor's or investee's "active status" will be in force for six months starting from the day of its registration. If the six-month period has lapsed and it has not successfully found a "match," it can ask PDIC to extend its enrollment in the "active list."

Since the Helpdesk was established, PDIC made "two successful matches involving four banks," Mr. Villaret said, but declined to name the lenders.

"The first match led to a consolidation, while the second match led to an acquisition," he added.

The central bank has been encouraging mergers and acquisitions in the banking sector to create few but strong institutions.

Together with the PDIC, it has introduced programs such as the Strengthening Program for Rural Banks (SPRB) -- and the SPRB Plus that succeeded it when the first program lapsed in August 2012 -- that provides incentives to investors in weak banks.

At present, there are four applications under the SPRB Plus that involve eight banks, PDIC has said.

Last year, Gokongwei-led Robinsons Bank Corp. and Sy-led China Banking Corp. were each able to acquire a thrift and a rural bank, respectively, under SPRB Plus.

There were other mergers and acquisitions last year. In February, Asia United Bank purchased the assets and liabilities of Asiatrust Development Bank, giving the former 28 additional branches.

This was followed by BDO Unibank, Inc.'s acquisition of Rural Bank of San Juan, Inc., which had 30 branches mostly located in Pampanga, Zambales, Tarlac and Pangasinan.

In June, East West Banking Corp. bought Pasig-based Finman Rural Bank, Inc. for P42 million.

This month, Lucio C. Tan-owned Philippine National Bank and Allied Banking Corp. finally received all regulatory approvals for their merger, which was announced in 2008. The merger is expected to take effect on Feb. 9.