SMC to sell Bancommerce stake to Malaysian bank

MANILA, Philippines - Food-to-infrastructure conglomerate San Miguel Corp. is finalizing a deal to sell 60 percent of its banking arm, Bank of Commerce, to the CIMB Group, Malaysia’s second-largest bank, sources privy to the transaction said yesterday.

Reports from the camp of the CIMB Group indicate that the Malaysians are prepared to shell out $231 million for the majority stake in the medium-sized commercial bank.

Sources said the talks have been progressing but the issue of the purchase price and the number of shares to be acquired are still being worked out.

However, the sources assured that the sale would push through as both parties have already agreed in principle on the sale.

CIMB had said in October it was in early talks to acquire a stake in Bancommerce from the San Miguel Group.

Bancommerce, with total assets of $2 billion, has a capital stock of P16.96 billion ($385.5 million) as of June 2011, latest bank filings with the central bank show.

Based on this data, a sale of a 60-percent stake in the bank could be worth $231.3 million.

The bank had total stockholders’ equity of P14.57 billion and 122 branches nationwide as of June.

The 60-percent stake represents nine of the 15-board seats in the bank.

San Miguel holds a controlling 76.4 percent in Bancommerce, with minority stakeholders that include Caritas Health Shield Inc. and Valiant Ventures and Development Holding Inc.

CIMB’s planned move is part of a strategy by Malaysian lenders to broaden their regional reach as the domestic market matures. In recent years, CIMB has already expanded its footprint in Southeast Asia, with purchases in Singapore and Indonesia.

Bancommerce reported a net income of P629 million in 2010, and is on track to achieve the full-year income target of P557 million for 2011.

Its loan portfolio stood at P28 billion as of end-August, while provisioning for probable loss stood at P372 million.

The treasury portfolio account for roughly 40 percent of the bank’s earning stream. Another 30 percent comes from its corporate banking portfolio, 13 percent from its consumer loans, and the rest from fee-based earnings.