Banking sources said the buyout was formalized in a memorandum of agreement signed early this week by the majority group headed by the United Overseas Bank Ltd. (UOBL) of Singapore and the Espiritu group. The agreement will give UOBL 100-percent ownership of UOBP, formerly known as Westmont Bank.
Unconfirmed reports indicate that the Singapore group has agreed to drop all its claims versus the Espiritu group "as long as the issue will come to rest." The dispute between the two groups reached as far as Australia where the Singaporean stockholders filed a case with the Australian Commercial Dispute Center (ACDC) in Sydney.
In turn, the Espiritu group will drop the case it filed with the Manila Regional Trial Court which issued an order enjoining all stockholders and officials from participating in the ACDC proceedings.
The same sources said the Singapore group decided to immediately settle the impasse "for the sake of the bank and their huge investments." Sources said officials of the Bangko Sentral ng Pilipinas (BSP) quietly intervened to settle the dispute before it got out of hand.
The majority group also decided to drop its request with the BSP that the directors identified with the minority group be removed from the bank’s board.
BSP Gov. Rafael B. Buenaventura openly called on both parties in late June to settle the issue and "find a win-win formula or face the risk of both losing the bank."
"The sooner they resolve the issue the better for the bank. Continued strife would likely result to a loss of depositors and other bank clients. Posturing by both parties is all counter-productive," the BSP governor said.
The two contending parties are the majority owners of the bank represented by UOBL of Singapore and the minority group represented by the family of Espiritu and Jollibee Foods Corp. president Antonio Tan Caktiong.
There were two contentious issues which the two groups could not agree on: the $1.4-billion "payment" of UOBL to the minority group and the funding counterpart of the minority group for the bank’s rehabilitation.
UOBP was known as Westmont Bank before UOBL acquired majority control for $1.6 billion. After infusing P3 billion for the rehabilitation of the bank, the Singaporeans agreed to use some P1.4-billion worth of uncollectible loans or the so-called "political loans" of the bank as their payment for majority control.
The minority group agreed to the arrangement. However, the Philippine Deposit Insurance Corp. (PDIC) and the BSP threw the proposal out of the window stating that the Singaporeans could not use the loans as payment since they were not yet in control of the bank.
"Whatever they had agreed on regarding the political loans is something that they should settle outside," the BSP governor reportedly said, adding that the monetary authorities will not recognize it as part of the bank rehabilitation. – With Des Ferriols