Business Mirror

By Honey Madrilejos-Reyes
Reporter

THE long wait is finally over for the Sy group.

On Monday, the respective board of directors of Banco de Oro Universal Bank and Equitable PCI Bank Inc. approved the merger plan of the two entities, effecting the largest merger in Philippine banking history.

Both boards have endorsed to their shareholders the approved Plan of Merger for final ratification.

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 proposed terms, BDO will serve as the surviving entity and EPCI shareholders will receive 1.80 BDO shares for every EPCI share.

The merged entity will be known as Banco de Oro-EPCI, Inc., in which Teresita Sy-Coson, the eldest daughter of mall tycoon Henry Sy, will sit as the chairman. Before the announcement of the merger, Sy-Coson was the vice-chairman of EPCI board and also chaired the bank’s executive committee.

“The merger of BDO and EPCI will bring together the banks’ organizational strengths, which we believe will provide greater customer service and enhanced shareholder value,” she said.

Upon the completion of the merger, BDO-EPCI will be ranked 2nd in terms of total assets; 3rd in net loans, 2nd in deposits and 3rd in branch network. At present, Metrobank is considered the country’s largest bank, followed closely by the Bank of the Philippine Islands.

“There was no intention at all to become the biggest lender here,” Sy-Coson said, adding that what she wanted the merged entity to achieve is 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.

BDO-EPCI has combined total assets of P613 billion as of end September 2006 and market capitalization of nearly P95.5 billion, based on closing prices as of Monday.

Asked if the next goal is to merge BDO-EPCI with China Bank, in which the Sy family also owns a substantial stake, Sy-Coson said, “No, China Bank is out of the equation.”

BDO president Nestor Tan, meanwhile, said the combined company is expected to realize substantial revenue and cost synergies.

“There will be greater opportunities to expand fee-based income and cross-selling potential through the combined bank’s 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,” said Tan, who will be the merged entity’s president.

Henry Sy, who is part of the Forbes’ list of wealthiest people in the world, is happy that the merger has finally happened after three years.

“Yes, I am very happy with this,” said the soft-spoken patriarch.

Meanwhile, Metrobank is not in any way threatened by the BdO-EPCIB merger, neither is it pressured to look for acquisitions because it is confident it would still remain the country’s largest bank.

“We’d rather focus on what we can do and what we can control. If they [EPCIB and BdO] are going to merge, there is nothing much we can do about it,” said Metrobank president Arthur V. Ty.

While the merger is a very big move for the banking industry, Ty said what they’ll do is to keep an eye on the competition and continue to grow Metrobank’s business.

“I’d rather have our focus on our clients and on our business rather than somebody else’s. So, we do have some plans in terms of making the business stronger, which I don’t think is impacted in any way by the mergers or acquisitions of competitors,” he said.