Banco de Oro, First e-Bank agree on P10-B liability limit

Banco de Oro (BDO) and First e-Bank (FSTE) of the Metro Pacific Group have agreed on a P10-billion limit in the transfer of FSTE’s liabilities in line with BDO’s planned takeover, documents submitted to the Philippine Stock Exchange (PSE) show.

Based on additional information furnished by FSTE, BDO has agreed to the P10-billion cap in the assumption of FSTE’s liabilities to BDO in exchange for select assets and assumption of deposits as reached in their Sept. 25 memorandum of agreement.

The Monetary Board–the policy-setting body of the Bangko Sentral ng Pilipinas–has approved 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.

"Our MOA with BDO is covered by reasonable confidentiality restrictions requiring us to obtain consents, including those from regulatory agencies," FSTE said.

FSTE, the banking arm of the Metro Pacific Group, said subject to due diligence and validation procedures, the valuation of assets and liabilities will be at book value conforming to regulatory standards.

FSTE said they are targeting the effective implementation of the MOA on or before Dec. 2, 2002. With the purchase, BDO, the banking unit of the SM Group of taipan Henry Sy, will be catapulted into the ranks of the 10 biggest universal banks in the country.

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. Combined, the two bank’s branch network will exceed 180 outlets nationwide, a significant number of which are FSTE branches where BDO has limited presence.

The agreement will also involve the amendment of FSTE’s articles of incorporation to change its primary purpose from that of thrift banking to a non-banking business and revert 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 but has tapped the services of global financial conglomerate ABN-Amro for assistance in preparing the new business plan.

He assured FSTE shareholders that they will remain as such but upon implementation of the BDO transaction, the FSTE stockholders will then become owners of a non-banking corporation.

Meanwhile, FSTE depositors will experience no interruption in their banking service as the transition 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.