Yao-owned bank eyes Taiwanese investor

Philippine Business Bank (PBB), the thrift banking arm of the Zest-O group, is considering a partnership with Taiwan Cooperative Bank Co. Ltd. (TCB), a state-owned bank focused on farming, fishery, cooperative and business financing.

Discussions with the foreign bank on a prospective buy-in deal started a few years back but were stalled by the change in administration in Taiwan following a national election in 2016, several industry sources familiar with the matter told the Inquirer.

Recently, there has been interest between the parties to resume discussions. TCB had previously expressed intention to acquire equity in PBB and become equal partners with the group of businessman Alfredo Yao, who founded the bank in 1997.

A banking source confirmed that TCB was the foreign banking party that had long been interested in PBB, adding, however, that no deal had been finalized.

Another source confirmed the long-running discussions, adding that “there’s no exclusivity as there are other parties which are interested.” Among interested parties, TCB has had the most extensive discussions with PBB, the source added.

PBB is seen keen on bringing a partner that can add value to the thrift bank, which focuses on lending to small and medium enterprises (SMEs) or those with assets between P3 million and P100 million, excluding land value where office, plant and equipment are situated.

PBB, the fifth-biggest thrift bank in the Philippines with estimated assets of more than P80 billion, believes that the SME segment is the major source of entrepreneurship and economic dynamism.

The SME space is also deemed as an underserved market, with most financial institutions focusing on the banking requirements of large corporations. TCB, which was established in 1946, is seen to offer a good fit to PBB’s SME focus.