China Bank gets SEC nod to merge 2 thrift banks

The Securities and Exchange Commission (SEC) has approved a plan by the Sy family-led China Bank Corp. to merge its two thrift banks to create the fourth largest thrift bank in the country, paving the way for expansion plans to serve the small and medium enterprises (SMEs) in the coming year.

In a disclosure to the Philippine Stock Exchange Monday, China Bank said the SEC has approved the merger of China Bank Savings Inc. (CBSI) and Planters Development Bank (PlantersBank), with CBSI as the surviving entity.

“This merger means our savings bank subsidiary can go full blast in 2016 to strengthen our presence in the consumer and SME markets. It caps a year of milestones for China Bank—the incorporation of our China Capital Corp. investment banking subsidiary, the launch of China Bank credit card (MasterCard), the rollout of our new core banking system (Infosys Finacle)—all of which will enhance our capabilities as a major player in the market,” China Bank president Ricardo Chua said, when asked about the rationale for this merger.

The two banks, under a single entity, have a combined asset base of P72.35 billion, a loan portfolio of P49.72 billion and a deposit base of P64 billion based on end-September financial statements. Combined with those of PlantersBank, CBSI will have 165 in total branches and an employee headcount of 1,866.

The merger will make CBSI the fourth largest among the country’s thrift banks. It will also account for around 15.3 percent of China Bank’s group-wide resources.

China Bank approved early this month a plan to infuse P2 billion in CBSI, a move mandated by the Bangko Sentral ng Pilipinas before it could approve the thrift bank’s merger with Plantersbank. The group was only waiting for the SEC approval of the merger to complete the capital build-up.

This latest capital infusion will bring the capital position of CBSI to P6.1 billion.

“The enhanced capital position will support future business growth of CBSI/Plantersbank in 2016 as it continues to expand in the consumer and SME sectors,” the bank said in an earlier disclosure.

China Bank earlier acquired a controlling stake in Plantersbank from the Tambunting family. It subsequently conducted a tender offer to buy out other minority shareholders.

Previously, China Bank’s Bulacan-based rural bank unit Unity Bank has likewise been consolidated into CBSI.

The China Bank Group also includes China Bank Insurance Brokers Inc. and bancassurance affiliate Manulife China Bank Life Assurance Corp.

In the first nine months of this year, China Bank chalked up a consolidated net income of P3.64 billion, 8 percent higher year-on-year, driven by stronger lending and lower cost of funding. This translated to a return on equity of 8.35 percent and a return on assets of 1.02 percent.

The group had total assets of P472.06 billion while the net loan book ended September with P287.43 billion, 5 percent higher year-on-year.