BPI, FEBTC stockholders OK merger

The majority stockholders of the Bank of Philippine Islands (BPI) and Far East Bank and Trust Co. (FEBTC) approved yesterday the merger of the two banks, making the combined entity the 10th largest financial institution in the region with over $3.5 billion in capital.

The merger catapulted BPI/FEBTC as the country's largest bank, accounting for 14 percent of the entire banking industry's total resources with combined assets of P372.4 billion. The merged institution will also have the largest branch network of 680.

BPI president Xavier Loinaz, in an interview, said they expect the integration of the two banks to be firmed up by the end of March this year.

"We think that by end of March this year, they (merger process) would be falling into place," Loinaz said, when asked about the merger timetable.

FEBTC president Octavio Espiritu assured FEBTC employees that they will work out ways to thresh out remaining issues regarding the merger particularly the possible massive displacement of FEBTC personnel.

While they are finalizing the integration, both Loinaz and Espiritu said the performance of their respective banks in 1999 was relatively "flat".

"We haven't seen any growth for the year, pretty much the same level as last year. Loans are flat for 1999," Loinaz said, adding that BPI's bottomline was also "flat".

The same thing with FEBTC, Espiritu said the bank's income was down due to loans provisioning amounting to about P2 billion for the year.

This year, Loinaz said they are still waiting for the economy to turn around. "Last year was quite disappointing. We showed a slight drop in (bottomline) the previous year," he added.

Loinaz said they do not expect "too much" from the first year of merger of BPI and FEBTC. But, he informed the stockholder that for 2000, the pro-forma projected earnings per share for the merged bank would be 5.37 percent, 6.31 percent in 2001 and 6.79 percent in 2001.

Based on BPI's closing price on Oct. 20, 1999, the day that the merger agreement was signed and announced, the exchange ratio represented an implied value of P82.50 per FEBTC share or an implied premium of 18 percent to FEBTC's closing price on that day.

According to Loinaz, they look forward to working with DBS Bank which now owns about 20 percent of the merged bank. DBS Bank is the second largest bank in the region.

"DBS is a strong regional bank and they bring a lot of regional presence. DBS will have great contribution particularly in the regional perspective. There are a lot of other markets that we are looking at," Loinas said.