CIMB eyeing PH thrift bank

After the collapse of a deal to take over Bank of Commerce, Malaysian banking giant CIMB is in talks to invest in Philippine Business Bank, a thrift bank led by the group of Zest-O founder Alfredo Yao.

Industry sources privy to the discussions confirmed that Yao was interested in taking CIMB as a strategic partner in PBB, similar to how he entered into an airline partnership deal with Malaysian budget carrier AirAsia.

But the sources said Yao at present would only consider ceding to CIMB a maximum stake of 35 percent in PBB.

CIMB is positioning itself as a strong regional bank ahead of the creation of the Asean (Association of Southeast Asian Nations) Economic Community expected in 2015.

Other banking sources said CIMB had also expressed interest in a couple of other banks apart from PBB.

One institution that has caught the attention of the Malaysian bank is Philippine Bank of Communications (PBCom). It was earlier reported that retailer Lucio Co had struck a deal to acquire a 37.67-percent stake in PBCOM for P5.97 billion.

Although the Philippines has already liberalized the entry of foreign players in the banking system, sources said CIMB still preferred to buy into an existing bank instead of organizing a new one from scratch.

The Malaysian institution is likewise willing to come in as a strategic investor with minority interest, like in the case of PBB where the principal is willing to divest only up to 35 percent.

PBB, a publicly listed bank, is currently valued by the stock market at P9.91 billion. This market capitalization suggests that a 35-percent stake in the bank is worth around P3.5 billion.

Banking sources said Yao sat down with top CIMB officials from Malaysia who were in town during the World Economic Forum East Asia Summit last May. AirAsia chief Tony Fernandes, with whom Yao has an existing business relationship, helped facilitate the discussions, the banking sources said.

PBB and CIMB have not finalized any definitive agreement to date. According to the sources, one point of discussion is, where CIMB intends to take PBB, in case it gains an interest in the bank. On its part, PBB has aspirations to become a universal bank in the future, based on Yao’s previous statements.

A potential entry into PBB as investor may give CIMB a foothold in Philippine consumer and SME (small and medium enterprises) banking.

PBB currently has 102 branches, two of which has been opened just this year. A total of 26 branches are set to open this 2014.

The bank has 21 branches in rural areas for every five branches in Metro Manila. It has committed to grow its network to 250 branches in the next few years as part of its growth strategy.