The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Asia round-up: Golden deal for Banco De Oro

The lengthy courtship between domestic Philippine lenders Banco De Oro (BDO) and Equitable PCI Bank (EPCIB) drew to a successful conclusion in November with news that the two banks had finally agreed terms for a merger.

More an acquisition of EPCIB by BDO than a true merger, the deal entails BDO offering 1.8 new shares for each EPCIB share, valuing the combined entity at almost $2 billion. BDO management will run the enlarged bank.

BDO looks like the real winner of the two. The deal is transformational for the bank, pushing it from sixth largest to a top three bank with combined assets of more than $12 billion and an increased branch network of almost 700. And with an exit price of around 1.8 times book, BDO has not overpaid. Management admits that the deal will immediately dilute earnings but it is expected to be “break even in 2007 and substantially accretive by 2008”, according to bank CEO Nestor Tan.

The merger might also bring an unforeseen fillip for BDO shares. Long a favourite with international institutions, the shares reached a 40% foreign ownership level some time ago. The new share issue will increase the equity base significantly, reducing foreign ownership to below 25%, claims management. Expect to see foreign investors add to their holdings in the stock over the next year.

Expect also more bank consolidation. The country’s most acquisitive bank, Bank of the Philippine Islands, is expected to hit the acquisition trail again soon.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree