China Bank buying 67% stake in Plantersbank

Henry Sy-led China Banking Corp. (China Bank) aims to strengthen its small- and medium-enterprise (SME) lending business with its acquisition of Planters Development Bank, which was approved Wednesday.

In a disclosure to the local bourse, China Bank said it was planning to take over the smaller bank by acquiring as much as two-thirds of its shares.

The deal combines the resources of Plantersbank, the country’s leading bank for SMEs, with China Bank, a 93-year old universal bank with a “history of supporting entrepreneurs in the country and a solid track record of financial strength and stability,” China Bank said in a statement.

Shares of China Bank were up by 4.35 percent on Wednesday following the announcement. The company’s stock outperformed the main index, which closed 0.16 percent lower.

The Sy group also controls BDO Unibank, the country’s biggest lender.

“The Plantersbank deal bolsters China Bank’s current strategy in two areas—growing its middle market/SME portfolio and its network expansion program. China Bank is in the midst of the most rapid expansion in its history,” the Sy-led bank said.

From 148 branches in 2006 at the start of its expansion program, it has a total network of 333 branches to date, complemented by 544 ATMs nationwide.  The group will now have a combined network of at least 411 branches.

As of June 2013, China Bank had total assets of P345.6 billion, gross loans of P189.9 billion, and stockholders’ equity of P44.6 billion.

For the first semester of 2013, the bank posted a 46-percent growth in consolidated profit to P2.96 billion from P2.03 billion in the same period last year, for a return on average equity of 13.24 percent  and a return on assets of 1.81 percent.

The China Bank Group includes China Bank, China Bank Savings (CBS), Unity Bank, CBC Insurance Brokers Inc., and Bancassurance affiliate Manulife China Bank Life Assurance Corp. (MCBLife).

The Investment & Capital Corp. of the Philippines (ICCP) acted as the exclusive financial adviser to Plantersbank for the transaction.

Plantersbank, chaired by former Ambassador Jesus Tambunting, has total assets of more than P52.7 billion as of May 2013, total loan portfolio of P33 billion, deposits of P43.6 billion and nationwide network of 78 branches.