Bank of Commerce approves San Miguel stake increase

MANILA, Philippines - Mid-sized Bank of Commerce is seeking the central bank’s approval to raise its authorized capital stock to P6 billion from P4 billion, which will pave the way for a takeover by food and beverage giant San Miguel Corp. The request was filed two weeks after the bank’s stockholders agreed to give the San Miguel group a 51% stake in the Bank of Commerce in a meeting held May 20. "That [acquisition] has been approved by our board and stockholders," Bank of Commerce President and Chief Executive Raul B. De Mesa told BusinessWorld. "We are now in the process of increasing our capital stock to accommodate that. We have a pending request with the central bank." San Miguel currently has a 34.3% stake in the bank, after its subsidiaries San Miguel Properties, Inc. and San Miguel Corp. Retirement Fund bought 10 million common shares at P200 each, or a total of P2 billion, in April. The conglomerate wants to have a controlling stake in Bank of Commerce not by buying out existing shareholders but by infusing P2 billion in fresh capital, which calls for an increase in the bank’s P4-billion authorized capitalization. "After the central bank’s approval, we will file the necessary requirements with the SEC [Securities and Exchange Commission] to effect the increase in [San Miguel’s] holdings," Mr. De Mesa said. "We expect the approval very soon, as the objective of the central bank is to strengthen the capital base of all banks," he added. The higher capital stock, however, will effectively reduce the combined holdings of the Cojuangco family and minor stockholders to 29%. The bank’s website showed the Cojuangco group currently owns 12.7% of the bank. The other shareholders are Bancholders with a 9.8% stake, Professional Banker’s Group with 5.3%, Equitable Bank with 4.1%, Herrera Group with 15.5%, and the College Assurance Plan (CAP) with 17.4%. Mr. De Mesa said Arctic Capital Ltd., an investment company led by Australian gaming mogul James Packer, is set to purchase the shares of pre-need firm CAP and another minor stockholder. "The Arctic group will own 20%. They signed an agreement to purchase the shares of CAP and another stockholder," he said, without naming the latter. San Miguel officials earlier said the conglomerate is not interested in entering the banking business but intends the acquisition to give buyers of San Miguel properties ready access to mortgage financing. The bank targets to grow its bottomline to P800 million this year from P528 million last year, Mr. de Mesa said. - Maria Eloisa I. Calderon, BusinessWorld