China Bank seen better if left out of BDO-ECPI Bank merger

China Banking Corp. will contribute in "its own small way", but Equitable PCI Bank will be more effective under the banner of Banco de Oro Universal Bank, said. Teresita Sy-Coson, board member of Equitable PCI Bank and executive vice president of SM Investments Corp. (SMIC).

"China Bank contributes well in its own small way, and is best left as an expert on its own field of expertise," Sy-Coson said.

The SM Group is a majority stakeholder in China Bank, which is considered among the most profitable commercial banks in the industry.

The Henry Sy-led conglomerate also controls significant equity in both Equitable PCI Bank and Banco de Oro.

However, Sy-Coson admitted that while the SM Group remains interested in merging the two banks, talks with state pension funds Social Security System (SSS) and the Government Service Insurance System (GSIS) remain in limbo.

The plan to acquire the entire 26-percent stake in Equitable PCI Bank held by the SSS is still hanging as the Supreme Court is hearing the case filed by Sen. Sergio Osmeña III questioning the legality of the transaction.

The management team of Equitable PCI Bank (EPCI) earlier expressed optimism that the entry of the SM Group would ensure achieving its growth targets this year and the succeeding years.

"With the recent entry of the SM Group and the Sy family, the bank expects to reap benefits from the potential synergies which can be derived through working relationships with the said group," EPCI president and chief executive officer Rene J. Buenaventura said.

He added: "The massive market reach of SM in particular will complement our bank’s thrust in the retail banking and consumer finance sector, which has been a major initiative that management has been relentlessly pursuing in the past several years. We expect this development in ownership to further ensure our competitiveness. It is also a testament to the bank’s solid financial performance."

Plans to acquire the EPCI shares held by the GSIS are "open" But Sy-Coson said the pricing issue must be reviewed.

GSIS general manager Winston Garcia said they are willing to sell their 12-percent equity in the bank as long as "the price is right or more than P90 per share." EPCI’s share price closed at P47.50 last Friday.

Sy-Cocon said that SMIC is always open to expanding its share in the country’s banking system implying that they are open to merging Equitable PCI Bank into Banco de Oro.

"We are always open to opportunities," Sy-Coson said.

The Bangko Sentral ng Pilipinas (BSP) remains persistent in encouraging the country’s banking system to engage in constructive consolidation through mergers and acquisitions to remain competitive in the regional market.

The country’s top five commercial banks are just middle capitalized players compared to the rest of the region. In fact, most of the major financial players of the country are ranked "average" versus their counterparts in the region, including investment houses and insurance companies.