Bancommerce to convert SSS stake into bonds

The Bank of Commerce has agreed to convert P600 million worth of shares of the Social Security System (SSS) in the closed Urban Banking Corp. into convertible bonds.

SSS chairman and president Carlos Arellano said the bonds will earn an interest of one percent over the benchmark 91-day Treasury bill rate.

Arellano said these bonds, equivalent to their stake in the Urban Bank, will be convertible in three years.

"This means that within a three-year period, we will have an option to convert these bonds to common shares if we want to," he said, adding that they expect to implement the rehabilitation plan for Urban Bank by the middle of this month if all the necessary details are ironed out.

According to Arellano, as far as the SSS is concerned, they want to join the Bancommerce in its effort to rehabilitate Urban bank. "They need a white knight like us to help them in rehabilitating the bank," the SSS chief said.

Aside from Urban Bank, SSS has stakes in Union Bank, Equitable-PCI Bank and Security Bank.

At present, the SSS is scouting for buyers for its Equitable-PCI Bank shares. He said they are in talks with two foreign financial institutions for this purpose.

But he said they have to discuss whether these two groups want to gain controlling interests in Equitable-PCI Bank or not.

Arellano explained that they can fetch a better price for their stake in Equitable-PCI Bank if they sell a majority or controlling interest in the bank.

He said they are discussing with the Go family if they could sell their shares in a block for a better price. "But all of these are exploratory," he added. – Donnabelle Gatdula