MANILA, Philippines - Union Bank of the Philippines plans to aggressively expand the network of City Savings Bank in Luzon, a top bank official said.
Justo Ortiz, Union Bank chairman and chief executive officer, said they plan to expand the existing 30 branches of City Savings to 40.
Ortiz said once approved by regulators, they plan to grow the branches of City Savings to about the same level as Union Bank which currently has 200 branches nationwide.
According to Ortiz, they hope to get all the regulatory approvals for the purchase of City Savings within the next 90 days.
He said they would probably keep City Savings as a separate subsidiary rather than merging its branches with Union Bank.
Ortiz pointed out that City Savings has its own niche market not currently being served by Union Bank.
“We are interested in City Savings because this is consistent with our focus and our 2020 goals what we set out to do…to become a retail bank as our historical roots are in the business of lending to corporate clients,†he said.
He added the acquisition of City Savings would allow Union Bank to develop a retail base usually not being served by a universal bank.
“It’s a profitable business and potential for growth particularly in Luzon, they can leverage on our operating platform and on our technology. Clearly a different market and a different brand, most probably be kept at a separate stand-alone subsidiary because the market is very specific, the behavior of the market is also different from our market,†he said.
As for Union Bank, he said they are comfortable with the number of branches they have right now. “We are fine with where we are, 200,†he said.
The Aboitiz Equity Ventures Inc. (AEV) board recently approved the proposed offer of Union Bank to purchase all of AEV’s shares in City Savings.
The purchase of 194,371 combined shares of AEV and Pilmico, which will be paid in cash, is subject to the results of a due diligence review. Total acquisition value is estimated at P5.7 billion.
As a thrift bank, City Savings is primarily engaged in offering loans to school teachers under the Education Department’s Automatic Payroll Deduction System.
Other products include salary loans to government and private sector employees, home mortgage and home improvement loans, as well as small business loans.
To date, AEV owns 44.82 percent of Union Bank’s total issued and outstanding capital stock and would have a resulting beneficial or attributable interest of 44.61 percent in City Savings’ equity after Union Bank’s acquisition.