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MANILA, Philippines—Banco de Oro Unibank, the country’s largest lender, has struck a deal to acquire Consunji-led One Network Bank Inc. (ONB), one of the biggest rural banks in the country and the leading player in Mindanao.
In a disclosure to the Philippine Stock Exchange on Tuesday, BDO said the acquisition was in line with a strategy to expand its presence in the fast-developing markets in southern Philippines.
ONB, a proponent of “inclusive” banking, has 105 branches and micro-banking offices in Mindanao and Panay.
“The addition of ONB to the BDO Group will give BDO access to new market segments in Mindanao and Panay Island, which are among the bank’s targeted growth areas,” BDO said.
The rural bank has total assets of P28.1 billion, net loans of P19.7 billion and a deposit franchise amounting to P17.9 billion as of the end of September.
“The combination of ONB’s regional presence and BDO’s financial muscle is seen to create new opportunities for growth. This partnership will enable ONB clients to access BDO’s strong balance sheet and expanded banking solutions, while providing BDO inroads to new market segments.
“The move is also in support of the Bangko Sentral ng Pilipinas’ thrust to promote inclusive banking through countryside branching and lending,” the bank said.
BDO said it aimed to expand its product offering to under-served sectors of the Philippine economy.
As to why the controlling shareholder Dacon Corp. is selling, a briefer from ONB said Dacon had already achieved its primary objective of providing credit facilities to “unbanked” agricultural communities.
ONB said the Consunji group’s entry into rural banking was prompted by an earlier desire of DMCI group chair emeritus David Consunji to provide financial access to areas where Dacons agricultural operations were located. It said ONB had eventually expanded to outgrow this initial role.
“Dacon is no longer in a position to provide for the next stage of growth needed by ONB under the competitive and future environment in the Philippine banking industry. With the potential entry of foreign banks, the dimensions of scale required for continued advancement in banking have increased considerably,” the briefer said.
“While the initial effect will be felt in the urban centers, the ramping up of competition will inevitably push banks deeper into the areas where ONB presently operates. The level of competition will require banks to have the scale to deliver an expanding menu of services more efficiently,” it added.
Based on the briefer, BDO intends to initially operate ONB as a rural bank and run it as a separate subsidiary but ONB may be reconfigured to reflect the needs of the market it is servicing.