In a disclosure to the Philippine Stock Exchange, BDO said its stockholders, representing more than two-thirds of the bank’s outstanding capital stock, voted in favor of the merger and the proposed increase in capital stock to P65 billion.
In a brief six-minute special stockholders’ meeting separately held yesterday afternoon, EPCIB shareholders also approved the merger with "no objections from the stockholders."
The new capitalization consists of 5.5 billion common shares and one billion preferred shares, all with a par value of P10.
The capital increase was made in order to finance the merger which mandates a 1.8 share-to-one share swap ratio.
"BDO authorized capital stock shall increase from P15 billion to P65 billion, to provide for the issuance of the necessary BDO common shares to effect the exchange ratio," the bank management said.
The merged institution will become the country’s number two bank in terms of assets next to the Ty-controlled Metrobank’s P629 billion, based on end-September figures. The Ayala-run Bank of the Philippine Islands has P529 billion in assets.
Combined, BDO and EPCIB will have a network of 698 branches, the largest in the industry next to BPI. It is also widely expected to become a leading player in the overseas Filipino worker market with a 25-to 30-percent share in trust asset management and leasing/finance.
The merged unit will also be a major player in the credit card business, cash management, investment banking, the small and medium enterprise market, the Chinese-Filipino middle market and in the top corporate accounts market.
This provides the combined entity with increased scale, which should result in cross-selling opportunities and greater cost efficiencies. Consequently, cost-savings in the areas of information technology, branch operations, marketing and product development can be expected.
As the surviving entity, BDO said its corporate by-laws and articles of incorporation will be retained. This means that the 11-man board of BDO will stay instead of the 15-man EPCIB board.
"The directors of the surviving bank as the effective date shall continue to be the directors of the merged bank, each to hold office in accordance with the articles of incorporation and by laws of the surviving bank and applicable law," BDO said.
BDO, the smaller of the two banks, cleared that retaining board seats will be a temporary condition "until their respective successors are duly elected and qualified."
EPCIB shareholders will be "entitled to proper representation in the board of directors of the merged bank in proportion to their respective shareholdings in the merged bank."
After the shareholders’ hurdle, the regulators — the Bangko Sentral ng Pilipinas and the Securities and Exchange Commission, will still have to give their respective stamp of approval before the merger can be fully effected.
The merged entity will be chaired by Teresita Sy-Coson while her father, retail tycoon Henry Sy, will remain as chairman emeritus. Nestor Tan will be the president of the merged bank while EPCIB president Rene Buenaventura will stay on as vice chairman for retail banking alongside Jesus Jacinto, who will be vice chairman for corporate banking.
SM Investments Corp., the listed investment holding company of the SM group, now owns 85.6 percent of EPCIB after minority shareholders accounting for 51.6 percent of the bank decided to sell their shares at P92 per share for a total of P34.49 billion.
Tan said the merger can be finalized within a six-month period, and will take two years to complete the operational integration.