The merger was approved by the MB after Banco de Oro (BDO) and First e-Bank reached an agreement where BDO agreed to take over P10 billion of deposits, liabilities and other assets of First e-Bank.
BDO is owned by retail magnate Henry Sy, while First e-Bank is a subsidiary of the Metro Pacific Corp. The agreement concluded months of negotiations between the two banks where BDO will be the surviving entity.
The Bangko Sentral ng Pilipinas (BSP) said BDO will be entitled to the incentives granted to merging banks, although the transaction was officially a hybrid merger that fell under the category of "integration."
BSP Deputy Governor Alberto Reyes Jr. told reporters that the MB approved the integration and granted BDO the incentives that would allow the bank to relocate its branches.
"If they are relocating any branch within the Metro Manila area, they only need to pay the usual fee of P1 million," Reyes said.
The merger would increase BDO’s customer base by an estimated 80,000 depositors and its network by a total of 57 branches, Reyes said.
First e-Bank has failed to make a profit since 1998, making it a prime candidate for take-over by larger banks. Despite its dismal performance, the bank has the primary attraction of being a listed bank.
By acquiring First e-Bank, BDO would not have to go through the rigorous and costly process of registering its securities for listing at the Philippine Stock Exchange.
The merger would also take the pressure off Metro Pacific which still has to deal with over $231 million worth of debt. First e-Bank was one of the biggest drain in the group, posting a P3.6 billion loss since it last made a P17.5 million profit in 1997.
First e-Bank has bad loans amounting to P2.58 billion which accounted for half of all credits as of June.
On the other hand, the merger would make BDO the 10th biggest bank in terms of deposits, expanding its deposits by P72.1 billion. BDO would now be ahead of China Banking Corp., which has P66.88 billion of deposits, also partly-owned by Sy.
Sy has been on an acquisition binge, completing the acquisition of 6.2 percent of San Miguel Corp. earlier this year, for a total of P9.6 billion.
First eBank was formerly the PDCP Development Bank. It was 83 percent owned by Metro Pacific. As a thrift bank it is authorized to do limited banking transactions. – Des Ferriols