MANILA, Philippines?Bank of the Philippine Islands recently bagged a deal to take over the local fund management business of Dutch financial giant ING. That deal will turn the Ayala-led bank into an investment powerhouse.
Making its first major acquisition since the buyout of Prudential Bank from the Santos family in 2005, the 159-year-old BPI will soon manage P78.4 billion in assets currently under ING Investment Management's care.
The deal, which is expected to be completed by September next year, will thus expand BPI's trust business by 17 percent, given its current assets under management worth P458 billion.
"We find this a rare opportunity to purchase a strong foreign asset management franchise that will combine with our superior local distribution network and investment expertise in this growing Philippine wealth management space. We see this strategic acquisition of ING's investment management and trust business as a value enhancing step to cement our leadership in the asset management industry," BPI president Aurelio Montinola III said.
ING Investment Management is a pioneer in the local unit investment trust fund (UITF) business, holding a 24-percent market share in this segment. It also manages the country's largest equity fund worth about P7 billion.
"The combined business will benefit from the enhanced scale, cost synergy and ability to offer the broadest range of investment solutions through our well trained branch network," said Maria Theresa Javier, group head and trust officer of BPI Asset Management.
Under the terms of the agreement, BPI will acquire 100 percent of ING Bank Manila's trust assets. The acquisition is subject to certain conditions, including regulatory approvals. The final price will be determined on closing date, which is expected in the next few months.
In a statement, ING said this divestment was in line with the ING Group's tack to separate its banking and insurance/investment management businesses, and sell the latter before the end of 2013. This was part of ING's agreement with the European Commission in October 2009 when the Dutch institution underwent global restructuring during the financial crisis.
In the Philippines, trust and investment management businesses are required to operate under a trust license. ING's Investment management activities are currently conducted through the trust department of ING Bank Manila, which holds a trust license. As a consequence, ING can no longer conduct investment management activities in the Philippines through ING Bank Manila.
Still, ING will continue to maintain its presence in the country through ING Bank, a commercial bank that is celebrating its 20th year anniversary this year.