SM Group raising its stake in Chinabank

The group of mall magnate Henry Sy Sr. is open to raising its stake in China Banking Corp., a profitable medium-sized commercial bank.

"We’re increasing our stake in Chinabank as long as the shares are available and the price is commensurate to the value of the company," SM Development Corp. chief executive officer and vice-chairman Henry Sy Jr. said.

The SM group owns about 42 percent of Chinabank through SM Investments Corp., Sysmart Inc., Shoemart Inc. and some personal shares held by the retail tycoon himself. The Yuchengco family holds around 18 percent of the bank while another key shareholder is the Dee family, which reportedly owns more than 10 percent.

When asked to comment on a looming merger between Chinabank and Banco de Oro, the banking arm of the SM Group, Sy said: "It makes sense to merge Chinabank with BDO, but this has to be carefully studied. We must remember that they are two different banks with different culture and services."

Chinabank, which has been operating for 84 years and maintains a strong niche in the Filipino-Chinese community, boasts of one of the best return-to-equity ratios in the domestic banking industry.

Analysts said a merger or consolidation of all Sy’s banking interests was imminent as BDO and Chinabank cater to the same market. They also foresee an eventual merger between the Go family-controlled Equitable PCI Bank and BDO, if the SM Group completes the acquisition of the Social Security System’s 29 percent stake in Equitable PCI Bank.

The deal valued at P14 billion is still awaiting clearance from the Department of Justice.

The purchase will make BDO the single biggest shareholder in Equitable PCI Bank.

The possible merger of Equitable PCI Bank, BDO and Chinabank would catapult the merged institution to the number two slot among local commercial banks.

BDO, which debuted on the Philippine Stock Exchange in 2002, has been rapidly expanding over the past few years. Equitable PCI Bank will be BDO’s third acquisition in a span of two years.

In Oct. 2002, it bought Metro Pacific Corp’s First e-Bank and followed this up with the purchase of the Philippine operations of the Spanish-based Banco Santander in July 2003.

With an asset base of P138 billion, BDO currently ranks ninth among the country’s biggest banks.

The Sy family previously owned a stake in Far East Bank and Trust Co. before the latter was sold to the Bank of the Philippine Islands.