ONB completes merger with New Corella

MANILA, Philippines - The Securities and Exchange Commission (SEC) has approved the plan of agreement and articles of consolidation paving the merger between Davao-based One Network Rural Bank Inc. and Rural Bank of New Corella (Davao del Norte).

The Bangko Sentral ng Pilipinas (BSP) through Circular Letter 2011-069 announced the incorporation of One Network Bank Inc. (A Rural Bank) with the approval of the plan of agreement and articles of consolidation of the two banks.

As early as January this year, the BSP has given the largest rural bank in the Visayas and Mindanao areas the greenlight to merge its operations with Rural Bank of New Corella that was acquired in August last year.

Rural Bank of New Corella is the fourth bank in the merged One Network Bank. Other banks included the former Rural Bank of Panabo of Davao del Norte, Provident Rural Bank of Cotabato, and Network Rural Bank of Davao del Sur.

Based on its proposal with the BSP, the bank wants to consolidate with the RB New Corella, thereby absorbing its operations since it will be renamed as One Network Bank Inc.

Latest data showed that total deposits of One Network Bank is nearing the P10-billion level while total loans is approaching the P7-billion mark. At the end of the first semester of 2011, the biggest rural bank in Mindanao reported total deposits amounting to P9.9 billion, or an approximate 34 percent growth rate from the P7.381 billion in the same period last year.

The rate of growth mimics the previous record high growth of 37 percent in deposits achieved last year versus previous year of 2009.

Total resources likewise ballooned to P12.3 billion in the first six months of 2011, or 30 percent higher than P9.48 billion recorded in the same period last year.

ONB president Alex Buenaventura said the huge increase in deposits was due to an increase in number of branches from 75 to 81 that widened the base of low-cost current accounts-savings account (CASA) depositors.

“Attractive time deposit interest rates brought in large depositors who are also commercial bank clients, and an increase in number of ATMs (automated teller machines) from 93 units to 107 units, generating a 26-percent increase in ATM active cardholder base from 251,000 in June 2010 to 316,000 end of the first half of 2011,” Buenaventura said.

ONB has a total depositor base of 525,000 accounts end June this year.

Meanwhile, loan portfolio quality improved as the non-performing loan (NPL) ratio declined to four percent as of end June 2011 from the six percent NPL ratio in the same period last year.

The Bangko Sentral ng Pilipinas (BSP) has been encouraging thrift, rural, and cooperative banks to consolidate their operations to boost the competitiveness of the industry.

The BSP recently tied up with the state-run Philippine Deposit Insurance Corp. (PDIC) and Land Bank of the Philippines for a coordinated incentive program designed to support the development of a stronger cooperative banking sector.

BSP Governor Amando Tetangco Jr. earlier said the Strengthening Program for Cooperative Banks (SPCB) would ensure that cooperative banks could meet the capital requirements set by the central bank.

Data from the BSP showed that there are 40 operating cooperative banks in the country with resources aggregating P15.9 billion as of end-March.

While the assets of the cooperative banking sector accounts for only a small fraction of the assets of the entire banking system, the BSP said it plays a vital role in the financial system since almost all of these 40 cooperative banks operate in the countryside

These banks, according to the central bank, provide the much needed financial services to hundreds of primary and federation cooperatives and their individual members who usually face difficulties in accessing banking services.

In August last year, a similar program for rural banks dubbed as the Strengthening Program for Rural Banks (SPRB) involving P5 billion in financial assistance was launched. To date, not a single transaction has been completed.