Merger of Aboitiz thrift banks gets BSP nod
Aboitiz-led Union Bank of the Philippines has obtained final approval from the Bangko Sentral ng Pilipinas (BSP) to merge its thrift banks with City Savings as the surviving entity.
This will pave the way for the merger of City Savings with its 100-percent subsidiary, Philippine Resources Savings Banking Corp. (PR Savings), which the group bought from the Ropali group of companies, a mid-sized conglomerate engaged in the motorcycle and agricultural machinery trade.
In its share-purchase agreement with the Ropali group, one condition precedent for the closing of the transaction was the approval of the BSP along with the subsequent merger between City Savings and PR Savings.
Union Bank disclosed to the Philippine Stock Exchange that City Savings received a letter from the BSP on Dec. 27, informing it of the formal approval of the merger between the constituent entities, with City Savings as the surviving entity.
City Savings enjoys a return on equity—at around 20 percent currently—that is seen high enough to sustain an annual growth of 15-20 percent and still buy a few banks on the side.
Earlier this year, City Savings signed a deal to acquire 51 percent of cash remittance and payments firm Petnet from parent conglomerate Aboitiz Equity Ventures.
The Union Bank group also signed a deal to acquire 55 percent of Progressive Bank Inc. (PBI), a rural bank in Iloilo that has served the province for more than four decades. City Savings agreed to acquire 49 percent of PBI while Union Properties Inc. agreed to acquire 6 percent.
Aside from buying PR Savings in 2017, City Savings also acquired Bogo-based lender First-Agro Industrial Rural Bank Inc. in 2016.
City Savings normally contributes P3 billion, or about 30 percent of Union Bank’s net profit, but this 2018, its contribution will be lower because of the eight-month suspension of a teachers’ salary loan program when the Department of Education fine-tuned its accreditation settings. The situation, however, was resolved in the second half of 2018.
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