BSP okays SM Investments’ acquisition of EPCIB shares

Investment holding firm SM Investments Corp. (SMIC) said the Bangko Sentral ng Pilipinas (BSP) has approved in principle its acquisition of more shares in Equitable PCI Bank (EPCIBank), the country’s third largest lender.

SMIC said in a disclosure to the Philippine Stock Exchange that it is now in the process of complying with the BSP’s requirements.

SMIC, the listed investment holding company of the SM group of retail tycoon Henry Sy, will raise its equity stake in EPCIBank to 85.6 percent after minority shareholders accounting for 51.6 percent of the bank decided to sell their shares to SMIC at P92 per share for a total of P34.49 billion.

A total of 374.9 million shares were tendered, including those of state pension funds Government Service Insurance System with an ownership of 13.55 percent) and Social Security System (25.84 percent), and other individual shareholders owning 1.34 percent.

The acquisition of SSS’s stake in EPCIBank, however, is subject to the resolution of a case pending in the Supreme Court.

Also covered by the transaction is the sale by EBC Investments Inc. of 78.81 million shares, representing a 10.8-percent stake in EPCIBank, for P7.25 billion.

SMIC said funding for the acquisition would come from a combination of internally-generated funds, sale of assets and borrowings.

The SM Group’s tender offer was in line with efforts to consolidate its holdings in EPCIBank, infuse more funds in the bank to help meet its capital requirements, and prepare it for new international risk weighting standards for banks under the Basle II convention and new reporting standards.

The group said it was also keeping its option to merge EPCIBank with another bank to further strengthen the bank’s balance sheet. Such a merger will, however, be subject to the approval of other EPCIBank shareholders and regulators.

A merger between the SM Group’s Banco de Oro and EPCIBank will create a financial institution that will likely overtake Bank of the Philippine Islands as the country’s second largest bank in terms of assets. Metropolitan Bank & Trust Co. remains the largest in asset terms, but its lead could come under threat as a result of the industry consolidation.

Since its listing in May 2002, Banco de Oro has grown steadily, partly through the acquisitions of small bank operations such as the local branches of Singapore’s United Overseas Bank Ltd. and Banco Santander Central Hispano SA of Spain.