Bank against the wall
Word is going around in business that a foreign bank is acquiring the majority control of a mid-sized local bank which is largely owned by San Miguel Corp.
That is Bank of Commerce, or BoC, with assets of P106 billion as of last year and which ranked the 15th-largest bank in the country.
In comparison, the biggest bank here, Banco de Oro (BDO), owned by the SM group of taipan Henry “Tatang” Sy, has resources of close to P1 trillion as of end 2010, or about 10 times larger than that of BoC.
Anyway, the business tidbit is that the second-largest banking group in Malaysia, known as the CIMB group, is injecting fresh capital into BoC, thus acquiring the majority control of the bank from the San Miguel group, whose interest will be diluted to about 30 percent.
San Miguel at present owns about 58 percent of the bank’s outstanding shares. A few years ago the San Miguel group, through subsidiary San Miguel Properties and the San Miguel Retirement Fund, also put fresh capital into the bank through subscription of new shares.
Still, the bank’s capital now amounts to about P14 billion.
In comparison, BDO has a capital of P87 billion, Metrobank with P82 billion and BPI with P77 billion. How do you expect BoC to compete head-on with those large banks? In getting deals and market share, it is obviously easy for the big banks to push little banks against the wall.
Apparently, the entry of CIMB Group into BoC is aimed to boost the local bank’s capitalization, giving it a lot of room for expansion. In the banking sector in this country, bigger is still believed to be better.
Now, in the past several years, Malaysian financial conglomerate CIMB Group has been acquiring interests in banks in the Asean, except the Philippines.
The group has investments in 14 countries, as of last count, including Thailand, Indonesia, and Singapore—the three other original Asean members together with the Philippines.
By the way, once upon a time, the CIMB Group also went by the name “Bank of Commerce” Berhad, when the group scrapped its old name “Bian Chiang Bank” sometime in the 1970s. It has since then acquired a number of banks in Malaysia.
Today, the CIMB group is ranked the second-largest financial conglomerate in Malaysia, with assets reaching more than P3.6 trillion (based on current exchange rates), or more than four times the size of BDO, the largest bank in the Philippines.
BoC recently went through a little reorganization, taking in a new CEO, Virgilio Coquingco, who used to be an executive in foreign banks (i.e. Royal Bank of Scotland and ABN-AMRO).
Pushed up in the reorganization was long time BoC president Raul de Mesa, who became chair. He is now out of the bank’s board, serving as a full-time trustee of the Pag-ibig Fund, known officially as the Home Mutual Development Fund.
In fact, an executive of San Miguel, Jeronimo Kilayko (assigned to San Miguel Properties), was seconded to the BoC to become its vice chair.
Here is the thing: It seems that with the acquisition of the controlling interest in BoC by the Malaysian group, De Mesa is going back to the bank as chair.
As they often say about banking in the Philippines, bank executives never retire; they just become executives in other banks.
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According to media reports, rumors persist that the group of PLDT chair Manuel Pangilinan, known as “MVP” in the local basketball scene, is acquiring the country’s flag carrier, Philippine Airlines, from the group of taipan Lucio “Kapitan” Tan.
Both sides have, however, denied the reports rather strongly, although it was also said that the negotiations between the two groups were already in “deep” stages.
Well, the MVP group also tried to acquire the publishing company that puts out national daily Philippine Star (and other publications), and television network GMA-7, in which the negotiations were also said to be in the advance stages—i.e. they were already talking about pricing. Both deals did not push through for whatever reason.
Anyway, even before the rumors about the MVP group’s acquisition of PAL, it was whispered in business circles that San Miguel vice chair Ramon Ang, known as “RSA” in the local basketball scene, particularly in professional league PBA, was talking to the group of Kapitan regarding San Miguel’s acquisition of PAL.
In other words, here they go again. Remember that both the MVP and the San Miguel groups competed for a huge chunk of interest in Meralco, which became the talk of business town, eventually resulting in the well-publicized rivalry between MVP and RSA.
Both MVP and RSA have been in an acquisition binge in the past several years. San Miguel acquired the country’s biggest oil company Petron, for instance, not to mention its big investments in power generating firms, while the Metro Pacific group of MVP acquired Philex Mining.
For the sake of our action stars in the Senate, those two separate acquisitions by RSA and MVP showed that their companies no longer limit expansion to business interests that are related to their main line, which in the case of San Miguel should be food and beverage, and for the MVP group, telecommunications.
In other words, among the big boys in business, the thing nowadays is no longer just expansion. They are going more and more toward diversification.
It is a wonder, at least to many think-tanks in business, why the taipans (who are actually the richest guys in the country) are not doing the same thing. Hmmm.
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Here is an announcement from the US-based Hawaiian Airlines: “Get two tickets for the price of one.”
Thus the cost of Manila-Hawaii roundtrip tickets for two is $780, and US for Manila-US mainland roundtrip tickets for two is $1,156. The special rates are available for travel until Dec. 15, 2011.
The airline flies out of Manila to US West Coast cities such as Las Vegas, San Francisco, Los Angeles, Phoenix, Sacramento, San Jose, San Diego, Oakland and Seattle.
