Malaysian group sets expansion plan for PH bank

Malaysian banking giant CIMB has unveiled an aggressive expansion plan for newly acquired Philippine banking franchise Bank of Commerce, after signing on Tuesday a deal to acquire a 60-percent stake in the bank from the San Miguel group for some P12.2 billion.

In a disclosure to the Philippine Stock Exchange, San Miguel Corp. and affiliates said they had agreed to sell up to 65 million shares in BoC.  The SMC Retirement Plan will, however, remain the largest minority shareholder of BoC with a 27-percent interest.

CIMB, which has regional expansion plans across Southeast Asia, expressed optimism on its entry into the Philippine market.

“As an Asean [Association of Southeast Asian Nations] universal bank, the expansion to the Philippines is a natural move. I believe we are entering this market at the right time, with the right deal and right partner,” said Dato’ Sri Nazir Razak, chief executive officer of the CIMB Group.

Incorporated in December 1963, BoC is the 16th-largest bank in the Philippines with total assets of P96.3 billion. It currently operates 122 branches and 300 ATMs throughout the Philippines.

“BoC is small today but it can grow quickly with its low loan-to-deposit base and high capital ratios. It also strengthens CIMB Group’s overall regional value proposition of facilitating intra-Asean investments and trade as well as travel,” said Nazir. “With this acquisition, our retail network will increase to 1,239 full branches, reaffirming our credential of having Asean’s largest branch footprint.”

Nazir said the CIMB Group was optimistic about the long-term prospects of the Philippine economy, being the fifth-largest economy in Asean and the second-largest in terms of population.

“The average annual real GDP [gross domestic product] growth in the Philippines has been about 4.9 percent for the past 10 years. This, together with the stabilizing political situation and pro-business administration, increasing trade links with Asean countries and an under-penetrated banking market means the Philippines has the potential of becoming very important to us,” Nazir said.

On the CIMB Group’s business plans in the Philippines, the CIMB CEO said: “On the wholesale side, we see the immediate potential of delivering banking and capital markets solutions to corporations. The consumer segment will take us a little more time and investment but we can get our remittance proposition up and running quickly. The most exciting part though is the access to the SMC ecosystem, which is a huge community of SMC entities as well as suppliers and partners.”

Nazir said one of CIMB Group’s strengths was its ability to integrate and derive synergy out of its acquisitions. “I have always said that the ability to integrate an acquisition is more important than the acquisition itself. We have a great track record thus far and will look to that as we bring BoC into the fold,” he said.