Banco de Oro–Equitable PCI Bank merger A Comprehensive Review

The Banco de Oro–Equitable PCI Bank merger was a major banking deal in the Philippines that took place in 2007. It was a result of the acquisition of Equitable PCI Bank by Banco de Oro Universal Bank.

The merger created a new banking giant in the country, with combined assets of over ₱1 trillion. This made Banco de Oro the largest bank in the Philippines at the time.

The merger was a significant move in the Philippine banking industry, and it had a major impact on the country's financial landscape. It marked a new era of consolidation in the banking sector.

The deal was finalized on March 28, 2007, and it was a major milestone in the history of the Philippine banking industry.

Banco de Oro initiated a series of strategic acquisitions in the early 2000s that solidified its position in the Philippine banking sector.

In 2001, Banco de Oro successfully acquired the Philippine subsidiary of Dao Heng Bank, adding twelve branches to its network.

BDO's aggressive expansion continued with the acquisition of the branches of First e-Bank from First Pacific, the majority shareholder in PLDT, in the same year.

By 2005, Banco de Oro had acquired the Philippine subsidiary of Banco Santander Central Hispano, further increasing its presence in the market.

In April 2005, BDO made a notable acquisition by securing 66 of 67 branches of the Philippine subsidiary of United Overseas Bank, a strategic move that followed UOB's announcement of converting its operations from retail banking to wholesale banking.

The deal was successfully closed on December 20, 2005, further solidifying BDO's position in the banking landscape.

Banco de Oro's wave of acquisitions during this period earned it the distinction of being the most aggressive bank in terms of mergers and acquisitions in the Philippines.

The merger between Banco de Oro and Equitable PCI Bank was a significant event in the history of the two banks. The merger was approved by both Banco de Oro and Equitable PCI Bank shareholders on December 27, 2006.

Regulatory approval from the Bangko Sentral was granted on April 25, 2007, allowing the physical merger to take place. By March 19, 2007, Banco de Oro and Equitable PCI Bank cardholders could access each other's ATM networks.

Banco de Oro's ATM network increased to 1,200 ATMs nationwide. The bank also synchronized its home and automobile loan products. Trading of Banco de Oro and Equitable PCI Bank shares was suspended on May 31, 2007.

All 727 million Equitable PCI Bank shares were delisted from the PSE on June 4, 2007. 1.3 billion Banco de Oro shares at ₱10 each were listed to cover the merger. Over the next few years, Equitable PCI Bank branches became Banco de Oro branches.

The bank rebranded itself as BDO, still standing for Banco de Oro. The legal name of the bank remained Banco de Oro-EPCI, Inc. until February 2008, when it was finally named Banco de Oro Unibank, Inc.

Banco de Oro played a significant role in the merger with Equitable PCI Bank. It agreed to the merger with Equitable PCI Bank through a modified stock swap deal.

The deal involved swapping 1.8 shares of Banco de Oro for every Equitable PCI share, which was valued at about ₱80.10 for every share. This was well above Equitable PCI's closing price of ₱72.50.

The merged bank was initially named Banco de Oro-EPCI, Inc. The sale of GSIS shares in Equitable PCI was approved by the Bangko Sentral's Monetary Board on November 28.

On January 6, 2006, Banco de Oro offered to buy the rest of Equitable PCI for ₱41.3 billion through a share swap option.

This deal would have created the second-largest bank in the Philippines, with Banco de Oro as the surviving entity.

Equitable PCI was given a deadline of January 31 to consider the deal.

International analysts had mixed opinions on the merger, with Standard & Poor's predicting that Equitable PCI's "B" debt rating could rise.

UBS hailed the deal as a "win-win situation" for both banks, claiming that Equitable PCI shareholders would find it attractive.

The merger would have increased Equitable PCI's capital adequacy ratio (CAR) without requiring it to raise more capital.

Under the deal, every one Equitable PCI share would be swapped for 1.6 Banco de Oro shares.

Alternatively, an independent accounting company would determine the swap ratio based on the book values of both banks under International Accounting Standards.

Equitable PCI's share price was expected to increase to as much as ₱73.60 under the deal, exceeding the ₱67 fair value target price.

BDO Unibank Incorporated has completed the takeover of the largest rural bank in the Philippines, One Network Bank Incorporated (ONB).

The acquisition was done through a share swap transaction, where BDO acquired 99.59% of ONB's outstanding capital stock.

This expansion is expected to open up business lines for BDO, particularly in the southern Philippines.

The acquisition offers access to Mindanao and Visayas that are not yet fully penetrated by the SM Group's universal bank.

ONB's total assets stood at P28.1 billion ($620.95 million) as of end-September 2014.

Net loans of ONB amounted to P19.7 billion ($435.22 million) as of end-September 2014.

BDO acquired up to 247.37 million common shares of ONB and 20,560 government preferred "A" shares.

The exchange rate was 0.2618 BDO share per one ONB share.

Shares of BDO gained 1.45% to P105 ($2.32) per share on the day of the announcement.

BDO conducted a tender offer to the minority shareholders of ONB in compliance with the requirements of the Securities and Exchange Commission (SEC).

The merger between Banco de Oro and Equitable PCI Bank was approved by both sets of shareholders on December 27, 2006.

Banco de Oro and Equitable PCI Bank cardholders could access each other's ATM networks and use withdrawal, balance inquiry, and cash advance services free of charge by March 19, 2007, increasing Banco de Oro's ATM network to 1,200 ATMs nationwide.

Trading of Banco de Oro and Equitable PCI Bank shares was suspended on May 31, 2007, and all 727 million Equitable PCI Bank shares were delisted from the PSE on June 4, 2007.

The bank rebranded itself as BDO, still standing for Banco de Oro, and the legal name of the bank remained Banco de Oro-EPCI, Inc. until February 2008, when it was finally named Banco de Oro Unibank, Inc.

The merged company had a market capitalization of two billion dollars and consolidated the large Equitable PCI branch and ATM network under the Banco de Oro banner, for a total of 685 branches.

Stockholders of both Banco de Oro and Equitable PCI Bank approved the merger in just 20 minutes and 7 minutes, respectively, paving the way for the creation of the country's second-largest bank in terms of assets.

The Banco de Oro–Equitable PCI Bank merger had a significant impact on the company's status. It moved up into large capitalized company status, defined as a company whose capital stands at a minimum of $700 million.

This new status resulted in a market capitalization of two billion dollars for the merged company. This is a substantial increase from their previous capitalization.

The merger also allowed Banco de Oro to consolidate the large Equitable PCI branch and ATM network under their banner, resulting in a total of 685 branches. This consolidation likely brought significant benefits to customers and the company as a whole.

In the Philippine banking industry, a significant wave of mergers and acquisitions took place in the 1990s, followed by another wave in the 2000s.

The first wave was encouraged by Bangko Sentral governor Gabriel Singson, who urged the creation of more banks to promote competition.

This approach was later reversed due to the Asian financial crisis, which led to a shift towards consolidation.

Under governor Rafael Buenaventura, the Bangko Sentral started the first wave of mergers and acquisitions to create more financially stable banks.

Notable acquisitions from this period included Citibank's acquisition of Insular Savings Bank and BPI's acquisition of Prudential Bank.

The second wave of mergers and acquisitions, which occurred later, included the acquisition of International Exchange Bank by Union Bank of the Philippines.

Another notable acquisition from this period was the acquisition of Philippine Bank of Communications from Philtrust Bank.

This consolidation continued under subsequent governor Amando Tetangco, who built on the efforts of his predecessors.

The merger between Banco de Oro and Equitable PCI Bank had significant effects on the company's status and operations. Banco de Oro moved up into large capitalized company status, defined as a company whose capital stands at a minimum of $700 million.

The merged company had a market capitalization of two billion dollars, making it a major player in the industry. This was a result of the consolidation of the two companies, which led to a significant increase in market value.

Banco de Oro's ATM network was expanded to 1,200 ATMs nationwide, making it one of the largest in the country. This was achieved by synchronizing the two companies' ATM networks, allowing cardholders to access each other's ATMs and use withdrawal, balance inquiry, and cash advance services free of charge.

The merger also led to the rebranding of Equitable PCI Bank branches as Banco de Oro branches. This was a consequence of the merger, which resulted in the bank adopting a new identity.

The combined entity was named Banco de Oro Unibank, Inc., and had a network of 680 branches and 1,200 automated teller machines.

The Banco de Oro–Equitable PCI Bank merger was met with resistance from the Social Security System (SSS). The deal lapsed on January 31, and by February 6, the SSS was attempting to draft a price for its stake in Equitable PCI.

The SSS wasn't the only one opposing the merger, as the GSIS also got involved. By March 23, the GSIS offered to buy the 34% SM stake at ₱79.50 per share in cash, earning Banco de Oro and the SM group some ₱8 billion.

President Gloria Macapagal Arroyo weighed in on the matter, stating that she would support the current stance of the SSS in avoiding any sale negotiations regarding its stake in Equitable PCI until all underlying disputes at the Supreme Court have been resolved. This added another layer of complexity to the already contentious merger.