The Market Monitor Minding the Nation's Business
By Jerry Maglunog
Two of the country’s leading universal banks—Banco de Oro (BDO) and UnionBank of the Philippines (UnionBank)—have just started alliances with other banks.
“It’s one of the strategies to assure growth especially now that competition is increasing,” said Genaro Lapez, the bank’s executive vice president and head of center for strategic partnerships.
At the moment, he said the bank hasn’t closed its option to buy another bank. UnionBank is no stranger to acquisitions, having bought a stable thrift bank, CitySavings, in 2011 for more than P5 billion.
If there are plans to buy another, Lapez said, it’s either another thrift bank or rural bank. Lapez said that the next acquisitions will be very important as due diligence is necessary when any bank decides to get another.
“I think it’s better to concentrate on what we already have than get another one,” the banker said. He hinted that, in case another acquisition is made, it will be the same setup with CitySavings, wherein the name wasn’t changed and only the top management was revamped.
UnionBank acquired the rural bank in December 2012, but it didn’t change its name, thus, it continued to be a separate corporate entity. “This was done to assure loyal clients that only the bank’s management has changed not the policies,” Lapez added.
The unibank bought more than 99 percent of the rural bank’s shares for P5.7 billion almost three years ago. According to the banker, it’s not simple to acquire a bank, because a series of due diligence and a go-signal from regulators are needed.
Lapez acknowledged that unibanking is becoming stiffer today, and that’s why banks are eager to launch programs that aim to strengthen operation, revenues and assets.
BDO, on the other hand, underwent a bigger acquisition deal when it bought One Network Bank (ONB), the biggest rural bank in Mindanao. BDO President and Chief Executive Officer Nestor Tan said the acquisition aims to serve Mindanao and Visayas better.
Formed in 2004 through the consolidation of Network Rural Bank of Davao del Sur, the Rural Bank of Panabo of Davao del Norte and the Provident Rural Bank of Cotabato, ONB is the largest rural bank in the Philippines in terms of assets, with a network of 96 branches in Mindanao, one branch in Makati City and a fleet of 135 ATMs throughout the provinces in Mindanao, including 17 localities where it is the sole provider of financial services.
It is the first rural bank in the Philippines to receive the nod of the Philippine Clearing House Corp. (PCHC) to establish a checking account, as well as to have its cheques cleared directly by the PCHC, instead of an intermediary bank.
The acquisition of the bank came after Tan, the Bankers’Association of the Philippines first vice president, announced that BDO’s strategy is to assure that’s it is growing organically. “It aims to increase more branches, ATMs and depositors,” Tan said in an earlier interview.
BDO is also not a stranger to acquisitions. Some years back, it acquired GE Money Bank and Amex Savings Bank Philippines, Rural Bank of San Juan, the trust business of Deutsche Bank of the Philippines and Citi Savings Bank.