EastWest rural banking units to get P820M capital boost
Philippine Daily Inquirer
Gotianun-led East West Banking Corp. has approved a recapitalization program worth a combined P820 million for two recently acquired rural banks—Green Bank Inc. and FinMan Rural Bank Inc.
In a disclosure to the Philippine Stock Exchange on Thursday, the country’s newest universal bank said its board had approved the infusion of P120 million in fresh capital to FinMan and the conversion into equity of P700 million worth of loans to Green Bank.
“The move to increase the capitalization of FinMan rural bank and the conversion of EastWest loans into equity of Green Bank are part of the execution steps we need to do to merge Green Bank with EastWest and retain FinMan as the rural bank subsidiary of EastWest,” bank president Antonio Moncupa explained in a text message.
He added that FinMan would be eventually renamed EastWest Rural Bank. “It will absorb some assets of Green Bank and thus the need for additional capital,” Moncupa said.
But some branches, microfinance loans and other assets of Green Bank that are more compatible for a rural bank operations will be acquired by FinMan, Moncupa added. The rest of the assets will be absorbed by EastWest, he said.
“At the end of the exercise, EastWest Rural Bank will emerge as a bank with roughly 40 branches, a clean balance sheet and strong capital position,” Moncupa said.
EastWest gained a foothold into the microfinance business in 2011 with the acquisition of the 46-branch Green Bank of Caraga. Earlier this year, the bank also acquired a rural bank based in Pasig.
In 2009, EastWest boosted its consumer lending business with the acquisition of the consumer finance units of AIG bundled into AIG Philam Savings Bank. Prior to that transaction, it gobbled up Ecology Savings Bank Inc. in 2003.
Last July 31, EastWest obtained approval from the Bangko Sentral ng Pilipinas to operate as a universal bank. Earlier this year, it listed on the Philippine Stock Exchange, the first bank to do so in eight years.
The bank plans to open 100 branches this year, 75 of which are in restricted areas. Based on its latest financial statement, EastWest has 158 branches, 103 of which are within Metro Manila and 55 in key provincial cities and towns across the country. About 34 branches are under various stages of construction and another 60 branches are set to begin construction.
Net income for the first half of the year amounted to P910 million, 3 percent higher than the level a year ago. Net interest income went up by 18 percent to P2.8 billion as the bank expanded its loan book while net interest margin remained at 6.8 percent, at the high end among its peers.—Doris C. Dumlao
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