FSTE corporate information officer Danielle Maria Sales said they have signed an agreement effective Oct. 23 wherein BDO will assume the liabilities of FSTE in consideration of the former’s purchase of selected and liquid assets of FSTE.
"Effectively, BDO will now manage the liquidity of the company, while the integration of operations of BDO and the company and validation of the deposits assumed by BDO will continue," she added.
BDO corporate information officer Elmer Serrano said the two parties have targetted the effective transfer of banking operations and branches of both banks to be finalized by December 2002.
On Sept. 25, 2002, the two banks ended almost a year of negotiations with the signing of a memorandum of agreement (MOA) under which BDO will acquire 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 two parties.
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 standard. With the purchase, BDO, the banking unit of the SM Group of taipan Henry Sy, will be catapulated 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 not need to either merge or consolidate since BDO already has a universal banking license from the BSP.
Under the MOA, 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, on the other hand, will bring to BDO its cash management business and 57 well-distributed branches. Combined, the two banks’ branch network will exceed 180 outlets nationwide, a significant number of which are FSTE branches where BDO has limited presence.
The agreement will also involved 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.
The officials 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.