BDO needs P2 billion more for integration with EPCI

BY IRA P. PEDRASA, BusinessWorld Reporter Banco de Oro Unibank, Inc. (BDO), the new corporate name of mall magnate Henry Sy’s financial giant, will spend P1 billion this year and another P1 billion in next year to complete its integration with Equitable PCI Bank. "There are still several components of the integration process... But our priority now is to complete [it] as soon as possible," said BDO President and Chief Executive Officer Nestor V. Tan in a briefing before the bank’s stockholders’ meeting on Friday. BDO received approval for its merger with Equitable PCI Bank (EPCI) in May and is in the process of integrating its operations with Equitable PCI, which used to be the country’s third largest bank in assets. The merged entity is now the second biggest bank in assets, with P608 billion, and the largest in capitalization, with P73 billion. Mr. Tan said BDO has to cough up money for the integration of branches, including people, change of supplies, forms and equipment. The integration also involves terminating certain leases, he added. He said P2 billion might be large and could affect the merged entity’s bottom line, "but we’re now being conservative about how much we use for our expenses." Aside from the integration, BDO has yet to rationalize present systems and business plans. "We have two investment houses, two insurance firms, two brokerage firms, two card companies... We have to free up our capital. We don’t need everything," Mr. Tan said. He said BDO has to fix its tie-ups with insurance firms in the sale of the latter’s products. "The dilemma is that we both have exclusivity contracts... We have to choose only one... Otherwise, we’re facing potential legal issues. It’s something that we can’t avoid," Mr. Tan said. BDO has an exclusive contract with Generali Pilipinas, while EPCI earlier formed an alliance with Philippine American Life and General Insurance Company (Philamlife) called Philam Equitable Assurance Corp. He said the merged entity is now talking to both insurance firms "and we’re working out something amicable." In a separate interview, Philamlife President and Chief Executive Officer Jose L. Cuisia, Jr. said BDO could retain both and continue with the contracts. He did not say what Philamlife would do if the bank reneges on its contract.