Solidbank assets boost First Metro capital to P10 billion

First Metro Investment Corp., the investment arm of the Metropolitan Bank and Trust Co. (Metrobank) Group, will increase its capital to P10 billion after absorbing the remaining assets of Solid Banking Corp.

In a press briefing Wednesday night, Metrobank senior vice president/controller Alfredo Javellana II said the transfer of Solidbank's real estate and some liquid assets was made possible after Metrobank acquired the banking operations of Solidbank.

When Metrobank acquired a majority stake of Solidbank, it agreed to assume all existing liabilities of Solidbank, including the servicing of deposits.

Javellana said when Metrobank took over the Solidbank's bank-related operations, the shell company was left with about P5.4 billion. Of this amount, P2.2 billion accounted for the real estate assets.

The plan, Javellana said, is for Solidbank to surrender its bank license for it to amend its articles of incorporation or absorb the by-laws of First Metro converting it into an investment house. After this, Solidbank will also change its corporate name to First Metro.

With this scheme, he said, First Metro's present capitalization of P4.6 billion as of end-December 1999 would be added to Solidbank's remaining assets of P5.6 billion, making its capital to reach P10 billion.

In the process, First Metro would assume the spot of Solidbank in the Philippine Stock Exchange (PSE) through backdoor listing.

He said First Metro expects to list additional shares in the market through public offering or private placement in the third quarter of this year.

As part of this initiative, Metrobank will make a voluntary offer to minority shareholders of Solidbank to exchange their Solidbank shares with Metrobank shares. The ratio will be four Solidbank shares to five Metrobank shares. This computation was based on the average market price of the two banks for the last 90 days. For the last three months, the shares of Metrobank in the local exchange averaged about P218-P220 each while Solidbank ranged from P275-278 per share.

According to Javellana, this move is part of the Metrobank Group's share in developing the capital market.

"First Metro is a good company. It contributes to the earnings of the entire Metrobank Group. It has no liquidity problem because most of its investment are focused on safe investment such as in government securities," he said.

As of end-December 1999, First Metro reported a net income of P420.1 million, 25 percent higher than in 1998. This represents a return on equity of about 12 percent. With additional equity infusion, capital funds reached P4.18 billion while total assets grew more than 100 percent to P14.45 billion.