PHILIPPINE NEWS SERVICE — Stockholders of Banco de Oro Universal Bank and Equitable PCI Bank yesterday approved the proposed merger of the two banks in separate meetings at the Makati Shangri-La hotel.
Banco de Oro, the country’s fastest expanding bank, will also increase its authorized capital stock to P65 billion divided into 5.5 billion common shares and one billion in preferred shares with a par value of P10 per share each.
Banco de Oro currently has some 925 million outstanding shares of common stock.
It needs the higher capital stock in line with the merger, an all-share transaction in which 1.8 shares will be swapped for each share of Equitable PCI Bank.
Some 78 percent of Banco de Oro stockholders approved the merger. The Sys also have more than 67 percent proxy shares in Equitable.
Teresita Sy Coson, vice chairman of SM Investments Corp., the holding company of the Sy group of companies, said the conglomerate had no plans to acquire another bank at the moment.
“This is a big chunk to digest but if there is an opportunity… a good opportunity, we will keep our eyes open,” Coson told reporters.
The Bangko Sentral ng Pilipinas requires the approval of only two-thirds of a bank’s shareholders for a merger.
Banco de Oro president Nestor Tan said no jobs would be lost following the merger because of the bank’s expansion mode but 120 of the 168 branches would relocated.
Banco de Oro has a strong presence in commercial and urban areas and as the highest deposits per branch in the domestic banking system. Equitable, on the other hand, is strong among the Filipino-Chinese business community.
Banco de Oro first offered a merger of equals in the first quarter of the year, proposing to swap one share of Equitable with 1.6 shares but the proposal did not get off the ground.
The merger offer resulted in a positive credit watch for Equitable at that time, indicating a possible upgrade in ratings.
Banco de Oro posted a 23 percent increase in its consolidated net income to P2.29 billion in the first nine months of the year. Third quarter income rose 53 percent to P1.03 billion from P672 million year-on-year. The net income translates to a return on equity of 14.03 percent and a return on assets of 1.17 percent.
Equitable reported a 34 percent increase in net income from January to September to P2.37 billion from P1.77 billion a year ago due to a surge in non interest income that made up for the weak loan demand.
In a statement released over the weekend, Equitable said noninterest income climbed 23 percent to P7.1 billion in the first nine months, with service charges, fees and commissions accounting for P3.87 billion.
Trading and foreign exchange gains amounted to P1.88 billion while miscellaneous income reached P1.3 billion.