Security Bank, the country's 13th largest commercial bank in terms of assets and capital, is set to acquire Federal Savings and Mortgage Bank for P550 million as part of its plan to expand its presence in the retail market, Security Bank president Rafael Simpao told The STAR yesterday.
"It (Federal Savings) is a small bank with very clean balance sheet. It does not have non-performing loans and it is relatively new," he said. The bank, based in Metro Manila, has three branches located in Makati, Novaliches in Quezon City and San Pedro, Laguna. Its total assets stood at around P500 million.
The bank, he said also intends to raise capital to over P10 billion by the third quarter of the year, from P7.9 billion at present, to finance its asset growth, improvements in its technology, and the acquisition of another bank.
The plan to acquire Federal Savings will be presented to shareholders on May 30. The increase in its capital has been approved by shareholders last year.
Simpao said the acquisition of Federal Savings is part of Security Bank's plan to go aggressively into the retail market, composed mostly of small to medium-sized industries. Right now, he said the bank is strong in the corporate and middle-market, accounting for the bulk or around 40 percent of its total loan portfolio.
Security Bank, which is controlled by the group of Frederick Dy, also intends to absorb its information technology subsidiary called SB IT Inc. complementing its strategy to modernize the bank's operations.
"We decided to grow internally. This has been our strategy since the fourth quarter of 1999," Simpao said. "We want to focus on expanding our asset and capital through internally generated funds."
This strategy, he said seems to be paying-off since the bank was among a few in the industry which posted higher net profits as of the first quarter during which it earned P116 million, up 15 percent from P101 million during the same period in 1999. Its deposit liabilities grew to P38 billion from P37.9 billion in end-December.
Its total resources amounted to P58.1 billion as of end-March, up from P55 billion in end 1999. Of its total resources, loans amounted to P28.7 billion while investment in securities stood at P9.2 billion.
The bank is also on a hiring mode as part of its effort to enhance its services. It has hired senior people from Solid Bank, Far East Bank, PCI Bank, Standard Chartered Bank, Citibank, and Hongkong Bank.