BDO's buying spree slows as 2014 nears

MANILA, Philippines - The almost insatiable expansion appetite of Banco de Oro Unibank Inc. (BDO) has been tempered by the proposed 2014 full lifting of the branching, including the so-called restricted areas.

The unprecedented growth of BDO as the country’s largest commercial bank is characterized by a number of bank acquisitions, or inorganic growth.

It presently operates over 760 operating branches and more than 1,400 ATMs, nationwide. Total resources exceeded the P1-trillion level, the highest ever recorded in the Philippine banking system.

BDO president and chief executive officer Nestor V. Tan said that the 18- to 24-month timeline prior to the full liberalization of the bank branching environment, might turn out to be ‘short’ in relation to an acquisition at the present date.

Tan explained that it normally takes at least six months to get the approval of government regulators for a bank acquisition.

It may take roughly a year to 18 months to integrate a large bank, as in the case of BDO’s absorption of Equitable PCI Bank.

“And the bank will be paying major or expensive premiums and other fees, although it would give the acquiring bank a lot of flexibility in terms of fielding and redeploying branches,” he explained.

BDO may opt to stay organic for the next two years, meaning it would simply apply for branch licenses. That would realistically mean 15 to 20 branches a year.

The two-year period would also allow BDO to prepare for the full branch liberalization by 2014.

 Early this year, Bangko Sentral ng Pillipinas (BSP) Governor Amando M. Tetangco Jr. said that authorities approved a two-phased liberalization approach to the full lifting of bank branching restriction by 2014.

It starts with the temporary lifting of the branch expansion in such cities as Makati, Mandaluyong, Manila, Parañaque, Pasay, Pasig, Quezon and San Juan.

Tetangco said that the lift the branching restriction in the eight restricted areas in line with the policy of the BSP to promote a competitive market environment conducive.

“This is a major policy reform that lifts the last remaining restriction on bank branching. We are expecting that the liberalization will further improve the competitive environment which should translate to better financial services for the public,” he said.

Tan explained that its present branch expansion mindset was not to open new areas or encroach on other bank’s turf.

A lot of BDO branches in the Metro Manila areas have limited physical space, and these has cramped its ability to service existing and expanding clientele.

“It is not to open new markets but to service existing clients,” Tan said, adding that branches are getting smaller and clients are getting more demanding.

 Meanwhile, the BDO chief executive admitted that their bid to acquire Export and Industry Bank (EIB) remains in limbo as “details and other issues” have not been resolved with both the regulators and EIB. Tan refused to explain what the “details and other issues” meant.