No word yet from SSS; But BDO-EPCI merger to continue

BY CARMINA REYES, GMANews.TV All eyes are on state pension fund Social Security System (SSS) on whether it will sell its 26 percent stake in Equitable PCI Bank to conglomerate SM Investments whose offer to buy out the bank's shareholders expires today. The tender offer will officially close on Monday, when SM will cross the shares at the Philippine Stock Exchange (PSE). "SM Investments and related companies announce today that the results of the tender offer to buy Equitable PCI shares will be summarized after it expires today," SM investor relations head Corazon Guidote said. SSS' move is crucial. The pension fund is the second biggest shareholder group in Equitable, next to the group of mall tycoon Henry Sy which has already increased its stake in the bank from 34 percent to 57.3 percent -- short of the 67-percent ownership level that would enable SM carry out a planned merger between its subsidiary Banco de Oro and Equitable. Government Service and Insurance System (GSIS) has already agreed to sell its 12.5 percent stake in Equitable to SM. EBC Investments Inc., which has a 10.8 percent stake in the bank, has also accepted SM's tender offer. The union will create a new banking giant with P611 billion in total assets: Banco de Oro had total assets of P284.33 billion as of end June, while Equitable had P326.94 billion. Metrobank, controlled by the group of taipan George Ty and currently the country's largest bank, had P588 billion in assets as of end June. A high-ranking source from however expressed confidence that the transaction will prosper. "It can be proxies. We only need proxies enough to have 67 percent," the source told GMANews.TV. "If SSS will give its proxies to the SM group, the merger will happen." If it prospers, this will be the biggest acquisition in the local banking industry since the Ayala-controlled Bank of the Philippine Islands (BPI) took over Far East Bank in 1999. "The merger will create a powerhouse institution with a major presence in business lines such as retail banking, asset management, foreign exchange remittances, credit cards, and underwriting. The two will have the backing of the SM empire and its affiliated companies, including San Miguel Corp," said ATR Kim Eng analyst Ed Bancod. "All told, these institutions generate more than 5 percent of the Philippines' GDP. Equitable, once combined with BDO, can be expected to fully lever up on such relationships to reel in new deposits, loans and other collateral businesses not just from the SM group, but also its tenants, customers, suppliers and affiliates," said Bancod. SM Investments on August 29 bared a P44.15-billion tender offer to buy Equitable stocks from shareholders. SM set the offer price at P92 per share, a 23 percent premium on Equitable's closing price on August 29 when the offer was announced. The shares will be paid over a period of two years - GMANews.TV