Union Bank to buy City Savings for P5.7 B

MANILA, Philippines - The board of Union Bank of the Philippines has approved the purchase of City Savings Bank for P5.7 billion, a bank disclosure to the Philippine Stock Exchange (PSE) said.

“Please be informed that the board of directors approved as proposed where the bank cannot any more walk-away from the purchase transaction of City Savings from the selling shareholders at the final price of 2.5 times the book value of the shares of City Savings based on the SGV’s final audited financial statements as of Dec. 31, 2012 and the BSP approval of UnionBank’s purchase,” UnionBank manager Raymundo Mendoza said.

UnionBank would utilize City Savings to expand its coverage to the retail banking sector.

Justo Ortiz, UnionBank chairman and chief executive officer,  earlier said they are planning to aggressively expand the network of City Savings Bank in Luzon once it completes the acquisition  next quarter.

Based on their proposed expansion plan, they would add more branches to the existing 28 to 30 branches of City Savings to 40 branches.

Ortiz said they plan to grow the branches of City Savings at about the same level as UnionBank which currently has 200 branches nationwide.

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 UnionBank.

“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 we are in the business of lending to corporate clients,” he said.

He said the acquisition of City Savings would allow Union Bank to develop a retail base usually not being served by a universal bank.

“Its 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 very specific, the behavior of the market is also different from our market,” he said.

As a thrift bank, City Savings is primarily engaged in offering loans to school teachers under the Education Department’s Automatic Payroll Deduction System.