Keppel to buy 10% of Equitable PCI Bank

Keppel Tatlee Bank Ltd. of Singapore is set to acquire 10 percent of Equitable PCI Bank by buying the shares of the Social Security System (SSS) and Government Services Insurance System (GSIS), SSS chairman and president Carlos Arellano said yesterday.

"Keppel Bank has finished doing its due diligence report. They like the bank. They found out that the numbers (in the financial statements) are good. We expect to complete a deal within a month's time," he said.

Arellano said the SSS and GSIS would jointly dispose of their holdings at over P100 per share. SSS and GSIS each hold a 15-percent equity in Equitable PCI Bank. He said Keppel Bank would pay in cash and convertible bonds.

After the deal is completed, the price of Equitable PCI Bank shares in the stock market is expected to move up. Once this happens, he said SSS and GSIS would have the opportunity to unload additional shares. But as of now, Arellano said the SSS and GSIS will refrain their 10-percent stake each in the bank.

Several foreign banks are interested in acquiring their shares in the bank, but Arellano refused to disclose the identities of these foreign banks.

It was earlier rumored that talks between Keppel and SSS/GSIS had failed after the Singaporean bank offered to pay only in convertible shares, debt papers that would be converted into equity in the bank after a certain number of years.

But Arellano said this issue has been ironed out after Keppel completed its due diligence report and found out that the bank's finances are in good condition.

As of the first quarter of the year, Equitable PCI Bank was the third largest bank in the country in terms of assets and capital next to Metrobank-Solid Bank and BPI-Far East Bank. Equitable had total resources of P250.754 billion and capital of P45.575 billion for the quarter ending March.

The merged Metrobank-Solid Bank, the biggest in the country, has total assets of P339.784 billion and capital of P51.561 billion while BPI Far East Bank has total resources of P307.932 billion and capital of P49.341 billion as of end-March.

Equitable PCI Bank, which merged late last year, is controlled by Equitable Bank with 55 percent. It has focused on big corporate accounts, and the Chinese and non-Chinese middle market. It is a dominant player in investment banking, leasing, credit cards and remittance handling.

The Bangko Sentral has encouraged mergers and acquisitions in the banking sector.