Metrobank buys Nova Scotia's 40% stake in Solidbank

Metropolitan Bank and Trust Co. (Metrobank) and the Bank of Nova Scotia (Scotiabank) have finalized yesterday an agreement for the sale of Scotiabank's 40 percent stake in Solidbank to Metrobank.

The sale-purchase agreement was signed by Metrobank vice Chairman Placido L. Mapa Jr. and Scotiabank senior vice president Robin S. Hibberd.

Under the terms of the agreement, the first 20 percent of the Scotiabank holdings was priced at 2.4 times the book value, while the remaining 20 percent was priced at 1.2 times resulting in an average price of 1.8 times the book value.

According to a Metrobank press statement, the premium on the first 20 percent was necessary to provide Metrobank with more than the minimum 67 percent holdings required to effect a merger. Payment will be 50 percent in cash and 50 percent through a share swap.

Metrobank president Antonio S. Abacan Jr., commenting on the agreement, said "upon completion of the merger, Metrobank will attain an improved level of operational efficiency from economies of scale, as well as rationalize its market segmentation and penetration strategies, especially with respect to the consumer market."

A Metrobank-Solidbank merger will give Metrobank total resources of over $10 billion, a capital of approximately $1.2 billion and a network of 821 branches.

Bangko Sentral ng Pilipinas (BSP) Gov. Rafael B. Buenaventura welcomed the agreement between Metrobank and Scotiabank.

Buenaventura said Metrobank has indicated that it will concentrate on integrating Solidbank into its operation before it looks at other banks.

Scotibank, for its part, has indicated that it is still committed to stay in the Philippines and will in the meantime operate as an offshore banking unit.

Buenaventura discounted the possibility of Scotiabank immediately bidding or acquiring any local bank as it does not expect to get fully paid soon.