BSP approves merger of East West Bank, Philam Savings

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has formally approved the merger between Gotianun-led East West Banking Corp. and Philam Savings Bank, BSP Deputy Governor Nestor Espenilla said during the weekend.

The Monetary Board gave its formal approval to the merger during its meeting last week, five months after it gave its conditional approval to the merger, Espenilla told reporters.

The board formally approved the merger following the submission of documents required by the BSP.

The merger of Philam Savings Bank,  a subsidiary of Philippine-American Life and General Insurance Co. (Philamlife) with East West Bank would make the latter the sixth largest credit card issuer in the country.

Last February, the BSP’s monetary board gave its conditional approval to the merger.

East West Bank president Antonio Moncupa has said the merger would expand East West Bank’s retail banking business and allow it to corner a bigger chunk of the credit card and auto loan markets in the country.

Through the merger, East West Bank expects to boost its assets to P63 billion from P49.924 billion as of 2008 and expand its credit card business from its current credit card receivables of at least P3.7 billion.

To bankroll the transaction, EastWest Bank had planned to issue Tier 1 capital worth P2 billion but Moncupa said the bank would keep its capital adequacy ratio (CAR) at 14 percent despite the cost of the merger.

Last year, East West Banking Corp. completed the issuance of Tier 2 capital notes worth P1.25 billion that it used to support its capital expansion program that included merger possibilities.

The issue increased the bank’s capital adequacy ratio (CAR) to 18 percent from 14 percent previously, significantly higher than  BSP’s minimum of 10 percent.

East West Bank is ranked 19th among local commercial banks in terms of assets, capital and deposits. In terms of loans it ranked 17th and 27th in terms of return on equity (ROE).