Conglomerate San Miguel Corp. is in talks with Malaysian banking giant CIMB group to build a local banking partnership through medium-sized commercial bank Bank of Commerce.
Banking sources familiar with the discussions said San Miguel would like to bring in Kuala Lumpur-based CIMB as a strategic investor in its banking arm BoC.
The San Miguel group is willing to trim its majority stake in BoC to 25 percent from about 70 percent in favor of CIMB, Inquirer sources added.
But no deal has been finalized yet as CIMB was still undertaking a due diligence audit on the privately held BoC, which has about P91 billion in assets and ranks 16th-largest among the country’s 38 commercial banks.
The deal is seen to allow San Miguel to focus on new ventures such as power generation and infrastructure while still participating in the growth of the bank as a minority investor.
As of the second quarter, BoC is capitalized at P14.5 billion. It had a deposit base of about P70 billion and a lending portfolio of P33 billion.
On the other hand, CIMB has long been seeking to gain a foothold in the local banking system as part of its ambition to become a strong regional player especially as the Association of Southeast Asian Nations (Asean) veers toward economic integration by 2015. CIMB claims to have the widest retail branch network across the region and packages itself as an “indigenous Asean investment bank.”
With total assets of 282.1 billion Malaysian ringgits ($88 billion), the banking giant has a presence in 14 countries, covering Asean and major global financial centers, as well as countries in which its customers have significant business and investment dealings.
Although the CIMB group now reaches 81 percent of the Asean population representing 89 percent of the region’s gross domestic product, banking sources said the Philippines was an emerging market that it could not ignore given the country’s 100-million population base. At the same time, a banking source said CIMB has been eager to catch up locally with key competitors that already have an onshore presence, particularly Malaysian Banking Berhad (Maybank), which has a local banking unit and a controlling interest in financial services group ATR KimEng Financial Corp.
“It’s a way to capitalize Bank of Commerce, to make it bigger and more competitive,” said Joseph Roxas, president of local stock brokerage Eagle Equities Inc. “It also seems to show that banking is not a huge priority of San Miguel because if it’s a priority, they will run it themselves. But they also recognize that it’s an important asset in the portfolio of any conglomerate and that’s why they would like to beef it up,” Roxas said.