(Update) BDO, Equitable stockholders approve merger

Stockholders of both Banco de Oro (BDO) Universal Bank and Equitable PCI Bank (EPCIB) on Wednesday approved a planned merger of the two lenders, paving the way for the creation of the country's second largest bank in terms of assets. BDO stockholders, who met early Wednesday morning, wrapped up the proceedings after only 20 minutes, while the EPCI board, which met during the afternoon, finished the meeting in seven minutes. Completion of the merger, however, is subject to regulatory approval and is expected to formally end in the first quarter of next year. BDO officials earlier said the combined entity will be named Banco de Oro-EPCI, which will have a market capital of about $2 billion, dislodging Ayala-owned Bank of the Philippine Islands from the number two spot. Metropolitan Bank and Trust Co. is the nation's largest lender in terms of assets. The new bank will also be the second largest in terms of deposits, and the third biggest in terms of net loans and number of branches. "What's next for us is the most challenging part, which is the integration of the two banks," BDO chairman Teresita Sy-Coson said. Sy-Coson assured that the BDO group has resources for the integration of the two banks, which is expected to be complete in 2008. "There was no intention at all to become the biggest lender here. We needed to expand at that time and we saw the opportunity to grow. If we can be the most efficient institution, that's more important to us than being number one," Sy-Coson said. She added what she wanted the merged entity to achieve is to keep market leading positions in its core business lines including corporate and middle-market banking, consumer banking, credit cards, assets management, remittances, leasing and finance. BDO parent firm SM Investments, which is controlled by the group of retail king Henry Sy, earlier ran a tender offer to Equitable shareholders. SM Investments offered to pay, in four tranches, roughly P44.15 billion for the Equitable shares. SM Investments paid 10 percent of the transaction price last October 2. Ten percent is due on June 2, 2007, another ten percent on February 2, 2008 and the remaining 70 percent on October 2, 2008. The offer generated 51.6 percent of Equitable's total shareholdings, increasing SM's stake in Equitable from 34 percent to 85.6 percent. The combination will be executed by means of a share-for-share exchange. Under the terms, BDO will serve as the surviving entity and EPCI shareholders will receive 1.80 BDO shares for every EPCI share. During the same stockholder meeting, BDO shareholders owning more than two-thirds of the lender also voted to increase the bank's authorized capital stock to P65 billion. The new capital stock will be divided into 5.5 billion common shares and 1.0 billion preferred shares. Both kinds of shares will have a par value of P10 each.-GMANews.TV