Ongpin-led Philippine Bank of Communications (PBCom) hopes to settle its P7.6-billion loan from Philippine Deposit Insurance Corp. before the end of this year as the bank enters its third consecutive profitable year, company chair Roberto V. Ongpin said.
The full payment of this loan will allow PBCom to free four of its 14 board seats currently occupied by PDIC nominees. Giving up the board seats was one of the concessions made by PBCom to PDIC in exchange for the loan.
Under the financial assistance arrangement with PDIC, the bank was required to maintain a capital adequacy ratio of 12.5 percent, which is higher than the Bangko Sentral ng Pilipinas’ (BSP) 10-percent minimum requirement.
The bank also needs the PDIC’s prior approval when declaring cash or stock dividends to shareholders.
“We want to get out of the financial assistance soon,” Ongpin told reporters at the sidelines of ISM Communication Corp.’s annual shareholders meeting.
Formerly a telecom company, ISM’s main purpose today is to serve as the holding company for the Ongpin group’s PBCom stake.
He said getting out of the PDIC’s financial assistance would be a prerequisite to the bank’s expansion in the years to come.
In the next 12 months, he said the company would strengthen its nationwide branch network and grow its loan portfolio to be supported by its stronger capital base.
The Ongpin group completed its takeover of PBCom, which it acquired for P4.7 billion from the Chung Luy and Nubla families, in November 2011.
Ongpin also noted that instead of pocketing their profits from the sale, the selling families reinvested in PBCom through the acquisition of newly-issued shares, bolstering the bank’s capital position.
ISM now controls 68 percent of the bank.
ISM president and CEO Eric Recto, who sits as the bank’s vice chair, said the company would seek the BSP’s approval for the expansion of the bank’s 64-branch network.
“Our plan is to be one of the top players,” he said.
Last year, PBCom posted a profit of P796 million, up by 35.6 percent year-on-year from 2010, mainly due to fair value gains on investment property of P315 million and higher foreign exchange earnings.
Ongpin, the local partner of British fund Ashmore, which has been investing heavily in the Philippines in the last few years, is also part of the group that holds the controlling stake in San Miguel Corp.
His group also has interests in real estate development (Alphaland Corp.), mining (Atok Big Wedge Co. Inc.), information technology and gaming (Philweb Corp.) and oil refinery (Petron Corp.).