The SM group-led Banco de Oro Unibank will consider an opportunity to bid for United Coconut Planters Bank when the government proceeds with a plan to privatize the bank.
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BDO, which has grown to become the country’s biggest bank in terms of assets and profits through a series of acquisitions, is still on the lookout for new acquisitions.
When asked whether the group would be interested in UCPB, BDO chair Teresita Sy-Coson said: “We’re always open.” But as to whether BDO would actually bid, she hinted that it would depend on the term sheet. So far, Sy-Coson said she has yet to hear BDO president Nestor Tan talk about plans for UCPB.
The government is preparing to auction a controlling stake in UCPB to allow the bank to undertake a recapitalization program that will set the path for future growth. The bank has mandated British bank Standard Chartered to look at the feasibility of privatizing government-sequestered shares in UCPB.
Standard Chartered will also draw up the term sheet to invite potential strategic investors. Bank officials are hoping that the bidding could take place within the year.
Industry sources said several banks were awaiting the term sheet to see whether it was feasible for them to make an offer for UCPB.
One option for the government, other banking sources said, would be to sell ahead or separately from the main bank its profitable insurance unit United Coconut Planters Life Assurance Corp. (Cocolife).
Sy-Coson agreed that selling the insurance and the main bank separately would be a good strategy. “I think it has to be separate. Usually that is how they can get more value,” she said.
BDO chalked up a record-high net profit of P22.6 billion in 2013, beating the earnings performance of any other Philippine bank for the first time. Reaping the fruits of years of faster-than-industry asset growth, this earnings performance by BDO topped the P22.5-billion net profit posted by Metropolitan Bank and Trust Co. and the P18.8-billion net income booked by Bank of the Philippine Islands last year.
Return on common equity last year improved to 14.5 percent from 12 percent in 2012.
After its landmark $1-billion rights offering, BDO’s capital base now stood at P164 billion, the largest in the industry as of end-2013.
For its part, UCPB last year obtained approval from shareholders to beef up its authorized capital to P40 billion. This gave the bank the leeway to double its capital with the implementation of the Basel 3 capital adequacy ratio framework this year. As of end-June last year, UCPB’s stockholders’ equity stood at P20.4 billion, based on its published statement of financial condition.
The Supreme Court ruled with finality last year that the government owned the shares claimed by businessman Eduardo “Danding” Cojuangco Jr. in UCPB and that these should be used for the benefit of the coconut farmers.
According to some bankers, among UCPB’s attractions were its good franchise and deposit base and good customer service feature. But a key hurdle seen would be pricing as government financial institutions like Philippine Deposit Insurance Corp.— which infused additional liquidity to UCPB several years ago— did not have the flexibility to book losses under the auditing rules for state-run corporations.
UCPB’s recapitalization program is backed by the Department of Finance, the Bureau of the Treasury, PDIC and the Presidential Commission on Good Government (PCGG).