Equitable-PCI plans to sell 20% stake to strategic partner

Equitable PCI Bank is willing to sell 20 to 30 percent of the bank to a strategic partner through a private placement after its planned initial public offering was postponed due to weak market performance in the past few months.

"Long before, we are thinking of increasing our capital before the deterioration of the stock market. Our plan is to go public. But prior to that we are also looking at the possibility of private placement for strategic investor. We are still sticking to that plan," Equitable PCI Bank president and chief executive officer Wilfrido Vergara said during the bank's annual stockholders' meeting yesterday.

Vergara said they are open to a strategic foreign investor who is "a regional player."

"We are open to have a foreign partner. This is what we need today. We really need to have a lot of allowances especially in the changes that take place in the regional financial services," he said.

Vergara said they are willing to sell form 20 to 30 percent of the merged bank. Which, would allow the strategic investor to have representation in the board, executive committee and even in the management of the bank.

"We are looking for a group of financial institution that can contribute something other than capital, it could be technology, could be business so we can have a partner with us when we go overseas," he said.

According to Vergara, they hope to seal an agreement with a strategic foreign partner anytime within the year. "I hope if we are lucky, this could happen within the year. There have been some interested parties. Our objective now is to discuss and pursue these talks."

He said the government financial institutions that have interest in the bank such as the Social Security System and the Government Service Insurance System are willing to "participate in this process."

"The GFIs are prepared to be part of the process where they can sell part of their shares as bank would issue more shares to the strategic investor," he said.

Vergara said they are also firming up the sale of the P1.7 billion Bankard, the credit company of PCIBank, to RCBC group. "Hopefully, we can finish the sale (of Bankard) by this quarter or by next month," he said.

He said this is part of the consolidation process of the bank wherein they intend to sell those businesses that have duplication. "At present, we already have our credit card company (Equitable Visa)," he said.

Aside from these, he said they are also working out some options to sell or consolidate their four savings bank. But in case they would sell, they would retain Equitable Savings and sell the remaining thrift banks such as PCIB Savings, MDB Savings Bank and Ecology Bank.

He said there are parties that have indicated their interest in buying the savings bank subsidiaries of the merged bank but they are still studying which route will be beneficial and cost effective.

The official said the combined branches of the two banks are enough to service their over a million depositors so they have to dispose of the savings bank if necessary.

"As of now, let it run in the time being, consolidate all of them into one, sell them individually or sell them as consolidated enterprise all of these will depend on kind of offer that we will receive," he said.

As of first three months, Equitable-PCIB earned more than P300 million. The bank expects to post a net income of P2 billion this year, higher than the P1.25 billion earnings reported in 1999.

The bank is setting aside about P2 billion each year in the next three years for loan provisioning.

"We are targeting 100 percent coverage in three years time. At that rate, we should be doing about P2 billion a year for provisioning annually for the next three years. In December we are doing about 47 or 48 almost 50 coverage aggregate reserves against non-performing loans," he said.

The level of non-performing loan of bank stood at 13 percent of total loans in the first quarter this year, up from 12 percent in end-1999.