"There would be no problem if they decide to merge the three banks. It could be the strongest bank in the country," a BSP source said.
But the source said the merger may take time and much effort to accomplish as the consolidation of their assets and liabilities could be complicated.
The possible merger could be an offshoot of the recent move of retail tycoon Henry Sy Sr., whose SM group controls BDO, to purchase an additional 12.68-percent stake in Chinabank. This will enable the Sy family to become Chinabank’s majority stockholder with a 54-percent stake in the said bank.
Early this year, Sy’s group also agreed to buy the equity shareholding of the state-run Social Security System (SSS) in Equitable PCI Bank.
The BSP has been urging banks, particularly the small ones, to merge and/or combine their resources to ensure financial liquidity.
The call was made by the monetary authorities after a number of bank failures prevailed in the industry (Orient Bank and Urban Bank) a few years ago which put many depositors at a disadvantage.
It was learned that the possible merger will complement the Sy family’s plan to expand its banking business.
While BDO has been doing well because of the number of branches it has, Chinabank is into traditional banking and Equitable PCI’s focus is on insurance and investment banking.
The BSP source said the possible merger of the three banks is also consistent with the efforts of the monetary authorities to enhance the long-term growth and stability of the financial system as a whole.
Based on its status report on the Philippine financial system for the second semester of 2003, the BSP’s objective is to make sure that the financial system deserves the public’s confidence and that it effectively performs its role as an engine of economic growth.
"Thus, while difficulties may inevitably subsist, the financial system will still continue to grow and serve the country well in the years to come," the BSP said.