Equitable PCI still faces a credibility problem
Former Citibanker Deogracias Vistan has taken over as CEO of Equitable PCI, and his main goal is to clean up the bank's balance sheet and its image. The bank’s relationship with Joseph Erap Estrada does not make Vistan’s task an easy one.
The Philippines' banking sector escaped with nothing more than a black eye from the 1998 financial crisis. However the shenanigans of Joseph Erap Estrada proved more of a challenge. Estrada was the catalyst for bringing one bank to its knees and raising the threat of systemic risk for the whole sector.
The merged entity Equitable PCI, in existence for only two years, has rarely been out of the headlines. In 1999, George Go, president of a small family-run bank called Equitable, decided he wanted a larger piece of the action. In fact, he wanted to be at the helm of the biggest bank in the Philippines. And he was prepared to do anything to get there. Go approached his close friend, president Joseph Erap Estrada, and told him how he needed help buying PCI Bank, the country's third largest. Estrada agreed.
A few days later Equitable launched what can only be described as a severely leveraged buy-out of its much larger counterpart.