SM’s Banco de Oro to buy First e-Bank

The SM Group’s banking arm Banco de Oro has acquired First e-Bank, the thrift bank unit of Metro Pacific Corp., a move that will catapult the former to the ranks of the 10 biggest universal banks in the country.

In a joint press statement, BDO and FSTE officials said the Monetary Board – the policy-making body of the Bangko Sentral ng Pilipinas – has approved on Sept. 25 the agreement reached by the two banks wherein BDO will purchase select assets, assume the deposits and certain liabilities of FSTE subject to a number of other conditions before closing and to the satisfactory documentation between the parties.

Since both BDO and FSTE are publicly-listed companies at the Philippine Stock Exchange (PSE), the officials said there is no need to either merge or consolidate since BDO already has a universal banking license from the BSP.

Under the agreement, which was reached after nearly a year of talks, BDO will assume the banking business of FSTE, thereby increasing its deposit base by about P10 billion and its customers by around 80,000, mostly from small and medium-scale enterprises.

FSTE will bring to BDO its cash management business and 57 well-distributed branches where BDO has limited presence. Combined, the two banks’ branch network will exceed 180 outlets nationwide.

"The acquisition of FSTE‘s business is in line with our commitment to grow shareholder value and enable BDO to become a significant player in the banking industry," BDO chairperson Teresita Sy said.

Manuel Pangilinan, chairman of MPC, FSTE’s majority shareholder, said their decision to entrust the business to BDO was in line with their thrust to focus on their core businesses.

"This brings together, on an operational basis, a well-capitalized bank in BDO, the country’s largest retailer, and a diversified business group with affiliation to the nation’s largest telecommunications conglomerate," Pangilinan said, referring to the SM Group, MPC and PLDT.

In a span of less than three years, MPC has sold off its stake in businesses such as bottled water, personal care and agri veterinary products to focus on its core business of property development – particularly the Bonifacio Global City – and address its outstanding debt obligations amounting to over P12 billion.

The agreement also calls for the amendment of FSTE’s articles of incorporation, changing its primary purpose from that of thrift banking to a non-banking business and reverting to its original name – PDCP.

FSTE first vice president and corporate information officer Elmer Nitura said the new business FSTE plans to go into is still under study. It has tapped the services of global financial conglomerate ABN-Amro for assistance in preparing the new business plan.

Nitura has assured FSTE shareholders that they will remain stockholders of the corporation. However, upon implementation of the BDO transaction, the FSTE stockholders will become owners of a non-banking corporation.

Meanwhile, FSTE depositors will experience to interruption in their banking service as the transfer of their accounts to BDO is effected and further enhanced by the greater access to BDO’s branch network and array of financial products and services.