Metrobank completes Solidbank deal

Metropolitan Bank & Trust Co. (Metrobank) shelled out yesterday P3.9 billion in cash as payment for the 40 percent stake of Bank of Nova Scotia (Scotiabank) in Solid Bank, bank officials said.

The transaction completed Metrobank's bid to acquire 91 percent of Solid Bank and effect a merger between the two institutions. The merger will create the country's biggest bank with total resources estimated at P339.784 billion, combined capital of P51.561 billion and P825 branches.

Last month, the two banks agreed on a 50 percent payment in cash and 50 percent through a share swap. Metrobank, however, decided to pay the full value in cash to effect the merger sooner and to make better use of its capital.

The two banks signed the sale purchase agreement yesterday.

Scotiabank said even with the sale of its shares in Solid Bank, it will continue to maintain its presence in the country through its offshore banking unit, established in early 70's. It acquired the Solid Bank shares in 1988.

"Although the sale is now complete, Scotiabank remains committed to the Philippines and we look forward to continuing to build our business there under the Scotiabank name and through our OBU," its president Bruce Birmingham said in a statement sent from its headquarters in Toronto, Canada.

Metrobank bought a total of 9.4 million shares of Scotiabank amounting to P3.9 billion. Half of the shares was priced at 2.4 times the book value per share, while the rest was priced at 1.2 times or an average price of 1.8 times the book value.

Aside from Solid Bank, Metrobank, through its affiliate, Global Bank, has acquired Asian Bank and Philippine Banking Corp.

A spate of mergers and acquisitions have swept the banking industry after the central bank imposed a gradual rise in the required capital, which will be completed in December this year. The capital hike is intended to consolidate and strengthen the industry.

Those that would not be able to meet the higher capital requirement would face a downgrade in its license, pay penalties, and even ordered to cease operation.

The BSP expects four to five local banks to dominate the industry right after the mergers and acquisitions are completed.