San Miguel Corp. sells 58% stake Bank of Commerce to CIMB

ON A BUYING BINGE. San Miguel Corp. says it’s in talks to buy several big acquisitions.

MANILA, Philippines — Conglomerate San Miguel Corp. signed on Tuesday a deal to sell a 58 percent stake in banking unit Bank of Commerce to Malaysian banking giant CIMB for about P12 billion.

In a disclosure to the Philippine Stock Exchange, SMC said it had agreed to sell up to 65 million shares in Bank of Commerce to CIMB subject to certain closing conditions, such as approval from the Bangko Sentral ng Pilipinas and Bank Negara Malaysia.

SMC and its real estate unit San Miguel Properties are selling the shares alongside those held by other bank shareholders like San Miguel Corp. Retirement Plan and Q-Tech Alliance Holdings Inc.

The San Miguel group through San Miguel Properties and San Miguel Retirement Fund owns about 79 percent of Bank of Commerce, which suggests that the transaction will leave it with a minority stake.

Industry sources said the deal would allow the San Miguel group to raise funds for new ventures such as power generation and infrastructure while still participating in the growth of the bank as a minority investor.

CIMB, Malaysia’s second largest bank, has about $98 billion (P4.12 trillion) in assets or bigger than the resources of the top three Philippine banks combined. It has long been seeking to gain a foothold in the Philippine 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.”

The Malaysian bank is likewise buying most of the Asia-Pacific units of the Royal Bank of Scotland, which has been rationalizing its operations in the region.

Based on the fourth quarter 2011 statement of financial condition filed by Bank of Commerce, it had assets of P96.03 billion, making it the 16th largest bank in the country in terms of resources.

Bank of Commerce is capitalized at P19.44 billion.  It has a deposit base of P71.81 billion and a loan book of P44.57 billion.

The entry of CIMB is also seen allowing Bank of Commerce to improve its profitability and asset quality ratios.  The local bank has a return on equity of 4.38 percent and an above-industry non-performing loan ratio of 10.47 percent.

SMC, which gained control of Bank of Commerce in 2009, has been diversifying out of its traditional food and beverage businesses in the last few years.  It has entered the power, oil, toll road, mining, airport and telecommunication businesses and most recently, bought a substantial stake and management control of flag carrier Philippine Airlines in a $500-million buy-in deal.