China okays additional PNB, Allied Bank investments in Xiamen-based bank

MANILA, Philippines - The China Banking Regulatory Commission has approved the additional equity investments of Philippine National Bank (PNB) and Allied Banking Corp. in Xiamen-based Allied Commercial Bank (ACB).

In separate reports to the Philippine Stock Exchange (PSE), PNB and Allied Bank said the Chinese regulator has given its nod for their additional investments worth 548.08 million Chinese yuan.

“The outward investment of PNB will be 394.1 million Chinese yuan while that of Allied Bank will be 153.98 million Chinese yuan, or its US dollar equivalent. In addition, Allied Bank will convert its share of 42.9 million Chinese yuan in undivided profits in ACB into equity,” Allied Bank said.

ACB, a majority owned subsidiary of Allied Bank and formerly known as Xiamen Commercial Bank, is located in Xiamen, Fujian Province.

With the investment, PNB will own about 38 percent of ACB. When PNB and Allied Bank finally merges, PNB will be the majority stakeholder of ACB.

Last year, the Bangko Sentral ng Pilipinas (BSP) gave both PNB and Allied Bank the green light to expand its business in mainland China using ACB as vehicle.

ACB would be able to capture the remittances of Filipinos based in mainland China. More importantly, it would also allow money transfer transactions going to and leaving mainland China to migrant Chinese and their beneficiaries.

Globally, remittances or money transfers directly related to mainland China is ranked second largest behind Mexico. The Philippines is ranked fourth, behind India.

While money transfer business for banks like PNB and ACB does not account for a significant portion of the bottom line, it opens huge opportunities for the introduction of bank products to the migrants and their beneficiaries.

Approximately 200 million migrants around the world sent to their respective homes approximately $283 billion in 2008. In the Philippines, $16.4 billion worth of remittances were sent by migrant Filipinos last year.