Metropolitan Bank & Trust Co. (Metrobank) firms up its acquisition of some 40 percent of Bank of Nova Scotia's (Scotiabank) stake in Solid Bank as it is set to pay over P1.8 billion in cash to the Canadian bank tomorrow, May 10, a ranking bank official told The STAR yesterday.
"We are paying Bank of Nova Scotia around P1.8 billion by Wednesday for the acquisition of its 40 percent stake in Solid Bank. We are supposed to close the deal on May 10," the official said.
The bank, controlled by the family of George S.K. Ty, acquired 9.4 million shares of Solid Bank owned by Scotiabank for P3.8 billion. As part of the agreement, 50 percent of the total purchase cost would be in the form of cash and the balance in Metrobank shares.
With the purchase of Scotia shares, Metrobank will now own around 91 percent of Solid Bank, Metrobank earlier acquired 51 percent of Solid Bank by buying the shares of the Lee and Madrigal families.
The bank paid a premium, equivalent to 2.2 times its book value, just to acquire Solid Bank. Analysts said the bank has paid a "very high price" for its expansion binge. Its subsidiary, Global Bank, has also acquired Philippine Banking Corp. in July 1999 and Asian Bank in December.
The acquisitions were part of the Ty's strategy to keep Metrobank the biggest bank in the Philippines. It almost lost this distinction to Bank of Philippine Islands after the Ayalas bought Far East Bank in July last year.
"I think it's not worth the price," an analyst from a foreign investment bank said. "They (Metrobank) paid a premium on the shares. And it will take time before the bank reaps the benefits of the merger."
A Metrobank official, however, said they believe that the merger with Solid Bank would be advantageous to the bank, regardless of the costs involved.
"We will realize economies of scale. We will expand our client base and save on operating and maintenance costs," the bank official said.
To maximize the benefits of the merger, Metrobank has contracted the services of Andersen Consulting to study how it could increase the efficiency of the tie-in. Dndersen Consulting is expected to come out with the report detailing the integration process shortly.