Tycoon Andrew Gotianun’s East West Bank Corp. acquired Friday the bundled consumer finance businesses of the American International Group (AIG) in the Philippines, moving closer to its goal of rising as a major banking player.

East West Bank signed an agreement to buy AIG Philam Savings Bank, Philam Auto Finance (formerly Primus Finance and Leasing Inc.) and PFL Holdings Inc. The value of the deal was not disclosed. Industry sources earlier said it was “a little over P2 billion.”

The transaction will create an entity with combined assets of P63 billion and make East West Bank, erstwhile a niche player, the sixth-biggest credit card issuer in the country. It will also double East West Bank’s auto loan receivables to about P8 billion and make it the sixth-largest in the auto loans market.

“The Philam Savings Bank transaction is a significant milestone in the history of East West Bank and one that moves us a few steps forward in our ambition to be a more relevant participant in the banking industry,” East West bank president Antonio Moncupa Jr. said at a news briefing.

“This is very important if we are to breach the billion-peso income target next year and the P100-billion asset base in two-and-a-half years or so,” Moncupa said.

The transaction, which is still subject to regulatory approval, is expected to be closed in the second quarter of 2009. Moncupa said East West Bank could absorb all of AIG consumer units’ about 500 employees. He also estimated that the integration would be finished in six months.

“Our customers and our credit card, auto loan, deposit and trust businesses will benefit from East West Bank’s broad, nationwide distribution network, comprehensive product offering and affiliated businesses,” said Philam Savings Bank president Joven Reyes.

Reyes said it was important that the transaction presented an opportunity for his bank’s existing employees to “build a career with an institution that has much potential for growth and success.”

Jose Cuisia Jr., president of AIG’s local crown jewel and parent company of the consumer units, Philippine American Life and General Insurance Co. (Philamlife), said the parties were legally bound to keep the value of the deal confidential.

“The price is a reasonable price,” Cuisia said. “We believe it reflects the value of the assets being bought. This is why we came to an agreement.”

Industry sources earlier said that at a little over P2 billion, the deal fetched a premium of at least 25 percent over the combined book value of P1.6 billion of the consumer assets being sold.

East West Bank is currently raising P2 billion in tier-1 capital, or core capital, from its major shareholders for its expansion program. Moncupa said that even without the fresh equity the bank had excess capital.

After the consolidation, East West Bank will acquire nine additional branches to end up with a total network of 89, of which 54 are in Metro Manila. Moncupa said the bank aimed to end this year with 100 branches. With editing by INQUIRER.net