GSIS selling its 12.4% stake in Equitable PCI Bank

The Government Service Insurance System (GSIS), the state pension fund for government workers, is putting its 12.4-percent stake in Equitable PCI Bank on the auction block for a minimum bid price of P92 a share.

The move follows the strong interest reportedly expressed by foreign investor groups in EPCIBank, currently the third largest bank in the country, and Banco De Oro’s proposed merger with EPCIBank.

The pension fund’s plan to sell its 90.08 million EPCIBank shares was contained in a bidding invitation published in major newspapers yesterday.

Interested investors have until March 6 to submit their offers which should be accompanied by a cashier’s or manager’s check equivalent to 10 percent of the total offered price.

The minimum purchase price set by the pension fund represents a 50-percent premium over Equitable PCI’s current price. Equitable closed at P61 yesterday, down by 1.6 percent from Tuesday.

Just last week, the GSIS said it has received offers from two foreign groups to buy its stake in EPCIBank for P92 per share. The identities of these two groups, however, were not named.

BDO, the banking arm of retail tycoon Henry Sy’s SM Group, has proposed a merger with EPCIBank by offering to swap 1.6 of its shares for every EPCIBank share. Its offer is valid until Jan. 31. Based on BDO’s price of P37 Wednesday, its offer values each Equitable PCI share at P59.20.

Analysts said the bidding could force BDO to acquire the shares at the same price GSIS bought its EPCIBank shares in 1999. It also remains uncertain whether the foreign groups were serious in bidding for GSIS’ stake in EPCIBank.

BDO has become the single biggest stockholder of EPCIBank, owning 34 percent, by buying the shares of the Go family last year and accumulating shares from the open market. It is still short of the 67-percent support it needs to get its merger deal approved by EPCIBank shareholders.

Other major shareholders in Equitable PCI are state pension fund Social Security System, which holds 26.6 percent, and Trans Middle East Philippines Equities, which owns around 7.13 percent and is owned by the group of Martin Romualdez, the chairman of Equitable PCI Bank. Nearly 20 percent of EPCIBank is owned by public investors.

EPCIBank was the product of a merger between the Go family’s Equitable Banking Corp. and Philippine Commercial International Bank (PCI Bank) in September 1999 in a deal supported financially by the SSS and GSIS.

In late 2003, Banco de Oro agreed to buy the 187.85 million Equitable PCI shares of the SSS for P43.50 each, but the deal did not push through and has been the subject of a case in the Supreme Court.