Urban Bank finalizes deal with comm'l bank

Urban Banking Corp. is finalizing merger talks with a commercial bank after failing to seal an agreement with Pan Asia Banking Corp., Urban Bank president Arsenio Bartolome III said yesterday.

In an interview with The STAR, Bartolome said they are also looking at the possibility of buying a thrift bank.

"We will announce it (the merger with a commercial bank) next week," Bartolome said.

Bartolome declined to identify the bank they are going to consolidate with pending finalization of their agreement.

"It is only the price that we are firming up. We will have it finalized next week," he said.

Urban Bank had talked with several banks including TA Bank for possible merger but it was not able to close any deal. TA Bank is now owned by Manila Banking Corp.

Banks have been compelled to either merge or buy another bank since the Bangko Sentral ng Pilipinas (BSP) decided to suspend the issuance of new licenses for new banks and branches.

Admitting its difficulty to meet the required capitalization for universal banks, Urban Bank last year applied for the downgrading of its license from a unibank to commercial bank.

With this move, Urban Bank was forced to divest its shareholdings in Urbancorp Investment Inc. Giving up its other allied undertakings such as owning an investment house is a price it has to pay for downgrading its operations into a commercial bank.

Urban Bank has refocused its banking operations to deal with mortgage-backed securities. But, bank officials have admitted that for the past few months the housing sector had been lull.

Aside from MBS, Urban Bank is investing on its technology banking.