MANILA, Philippines—Union Bank of the Philippines is set to buy 32-branch thrift bank City Savings Bank, marking a consolidation of the banking interests of the Aboitiz group.
In a joint statement, Union Bank and parent conglomerate Aboitiz Equity Ventures announced the acquisition by the former of 99.54 percent of CitySavings for about P5.7 billion.
AEV, which owns 45 percent of Union Bank, owns CitySavings together with its wholly owned subsidiary Pilmico Foods Corp. After the acquisition, CitySavings will remain as a separate corporate entity, keeping its company name as well as its brand identity of simple and straightforward banking.
Union Bank will buy the combined 194,371 shares of AEV and Pilmico in CitySavings at 2.5 times the book value as of end-2012, subject to the results of a due diligence review. It is also conditional to getting approval from the Bangko Sentral ng Pilipinas.
“We believe very strongly that repositioning our financial services portfolio under UnionBank is the right strategic move to optimize value and growth opportunities. We envision UnionBank and CitySavings complementing each other’s management strengths, augmenting technological capabilities, and leveraging on each other’s financial capabilities.” AEV president and chief executive officer (CEO) Erramon Aboitiz said.
For his part, UnionBank chair and CEOJusto Ortiz said: “Our acquisition of CitySavings is aligned with UnionBank’s long-term strategy of building a great retail bank. CitySavings has a business model that gives us a strategic opportunity to expand our customer franchise, and an existing management team we have full confidence in.”
Established in 1966, City Savings has more than 300 employees, a stockholders equity of more than P1 billion and total resources of more than P9 billion, based on the bank’s website. It has 99,000 borrowers and a depositors’ base of over 59,000.
CitySavings president and CEO Mikel Aboitiz said, “We are very excited about this development. Increasing our strategic cooperation with UnionBank and combining our unique strengths will enable us to not only accelerate our plans to be the preferred teacher bank nationwide but also provide the next growth leg by expanding into broader civil servant and payroll loans market segments.”