BSP allows Singapore group to acquire up to 90% of UOB Phils

The Bangko Sentral ng Pilipinas (BSP) said yesterday the United Overseas Bank (UOB) of Singapore will be allowed to acquire only up to 90 percent of UOB Philippines pending the resolution of the ownership dispute over the remaining 10 percent of the bank’s shares.

BSP Governor Rafael B. Buenaventura said the Monetary Board has approved the acquisition but only up to 90 percent of UOB Philippines pending the conditions set by monetary officials.

United Overseas Bank Ltd. of Singapore had planned to buy its Filipino partners out of its local unit but the deal was marred by the dispute over the ownership of 10 percent of the bank’s shares.

Buenaventura said foreign banks are now allowed to own up to 100 percent of Philippine banks.

But Buenaventura said the BSP could not make a decision regarding UOB unless the rightful owners of the remaining 10 percent share have already been identified.

"When that question is resolved with finality, then we will decide on it and then, only if the rightful owners are even willing to sell," Buenaventura said.

The acquisition by UOB Singapore, Buenaventura said, should help build up the capital base of UOB Philippines so that it could emerge with a better acceptable capital adequacy ratio.

Under BSP rules, banks are required to earmark at least 10 percent of their capital as buffer for potential risks.

A bank’s capital adequacy ratio is a measure of the amount of its capital expressed as a percentage of its risk weighted credit exposures. This ratio is used to protect depositors and promote the stability and efficiency of financial systems around the world.

"The planned buy-out solves the problem of UOB Philippines because now it is owned by one of the largest banks in Singapore. This lessens the systemic risk to the banking sector," Buenaventura said.

UOB Philippines was formerly known as Westmont Bank owned by former Finance Secretary Edgardo Espiritu. UOB Singapore bought into the bank in 1999, acquiring up to 60 percent with some funds from the Philippine Deposit Insurance Corp.