Banco de Oro buys Banco Santander for P2.56 billion

Banco de Oro Universal Bank (BdO), the commercial banking unit of the SM Group, has acquired the high-end financial institution Banco Santander Philippines Inc. (BSPI) for P2.56 billion.

BSPI is the local subsidiary of foreign banker Banco Santander Central Hispano SA (BSCH).

Likewise, BdO Capital and Investment Corp. (BCIC), the wholly-owned investment house subsidiary of BdO, bought Santander Investment Securities Philippines Inc. (SISPI), the local stock brokerage arm of the Santander Group, for P28.4 million.

Under the terms of the purchase agreement, BdO will take in 88.45 percent of BSPI, with parent firm BSCH retaining 10 percent of the total share capital of BSPI in an escrow account for a six-to-nine month period, during which the acquired bank will continue to use the Santander logo under BdO management.

BdO said the acquisition gives it a firm foothold in the high net- worth individuals market, as well as expand its consumer and private banking market base.

BSPI is an extremely well-capitalized entity, with a strong balance sheet and high asset quality. As of June 2003, it had P5.2 billion in assets and a non-performing loan (NPL) ratio of zero percent.

"The market of high net worth individuals as well as private banking business, is a niche that BSPI had successfully developed over the years," BdO said in a statement.

BSCH executed the agreement with BdO as part of its worldwide strategy of concentrating activities in its core markets.

Meanwhile, the acquisition of SISPI automatically gave BCIC a membership card with the Philippine Stock Exchange (PSE).

Last year, BdO acquired the banking operations of medium-sized commercial bank First e-Bank as it completed its Tier 2 capital raising exercise worth $20 million.

BdO president Nestor Tan said the bank is looking at expanding its 120-branch network this year while increasing its share in the consumer banking market.

Tan said the bank would also take a more aggressive stance toward the credit card industry with the establishment of BDO Credit Card Corp.

"The credit card business is expected to boost BdO’s interest income and that of the SM mall business," Tan said.

The SM Group’s mall business has always been a growth catalyst in the expansion program of the bank. For example, when the SM Group established the Cebu mall, it gave birth to five BdO branches and the same was true for the bank’s five Iloilo branches.