Planters Bank in talks with potential investors

Planters Development Bank is in talks with several foreign financial institutions for their possible entry as new investors in the bank ahead of plans to go public, the bank’s top official said.

US-based Shorecap International Ltd. has already expressed interest in investing at least $10 million through an equity infusion but Planters Bank is also in talks with a Europe-based development bank.

“We have been dealing with the Europe-based development bank in previous years,” Planters Bank chairman and chief executive officer Jesus P. Tambunting told The STAR.

Industry sources speculate that DEG, the German government’s development bank (the equivalent of the Development Bank of the Philippines) is the likely interested investor. DEG was the biggest foreign subscriber of the P1-billion Tier 2 subordinated note issue launched by Planters Bank in 2005.

DEG remitted $7.5 million for the issue or practically the entire foreign-denominated segment of the issue.

Planters Bank, one of the country’s biggest thrift and development banks, need not issue new common shares which could dilute the present stake holders.

The International Finance Corp. (IFC), the private investment arm of the World Bank, the Asian Development Bank (ADB) and the Netherlands Development Finance Co. (FMO) are the existing foreign institutional partners of Planters Bank.

Bank sources said these foreign institutions acquired equity or entered into a strategic alliance to assist Planters Bank. “Some of them are prepared to sell out or relinquish their stake as they have already achieved their goals,” a source said.

Meanwhile, Tambunting said going public or listing at the Philippine Stock Exchange (PSE) was another option to raise funds from the investing public, especially for the needs of the small and medium enterprises (SME) sector.

“They (SMEs) are fueling the Philippine economy, and financial institutions must meet their needs,” he said.

Aside from raising more capital for lending program, competition among local financial institutions haA intensified lately as commercial banks have become aggressive in extending loans to the SME sector, the traditional stronghold of rural, thrift and development banks.

Planters Bank reported a loan portfolio of roughly P18 billion last year and plans to increase it further to at least P20 billion this year.