Merger forms biggest rural bank

When the Monetary Board (MB), the highest governing body of the Bangko Sentral ng Pilipinas (BSP) gives its nod, the country’s biggest rural bank will be officially formed.

To be known as One Network Rural Bank Inc., the mega rural bank (RB) is actually a result of a three-way merger between top performing RBs operating in Mindanao.

"The consolidation application has been approved by the Philippine Deposit Insurance Corp. (PDIC), and this is currently under process for eventual MB approval," said Alex V. Buenaventura, president of Network Rural Bank Inc. (Network Bank), one of the three rural banks that figured in the merger activity.

The other two RBs are the Rural Bank of Panabo and Provident Rural Bank of Cotabato.

One Network Rural Bank will be the biggest rural bank in the country based on its consolidated and audited yearend in 202. It combined total resources amounts to P2.4 billion while paid-up capital stood at P444 million.

It has deposits amounting to P1.6 billion and loans placed at P1.3 billion. Depositors number over 223,000 while borrowers at 47,000. The merged bank would have a branch network of 46 spread out in Mindanao majority of which are located in Cotabato and Davao.

Buenaventura explained that the merger exercise is that of three healthy banks bonding together rather than the usual one bank absorbing another due to weakness of the latter. All three ranked among the top 10 RBs based on PDIC data.

Network Bank ranked second, RB Panabo ranked fourth, and ProBank ranked eigth in profitability out of a field of more than 700 rural banks nationwide. "This is a union of strong partners," he stated.

But he stressed that the resulting bank will remain a rural bank although they are seeking certain concessions with the MB with regards its operations.

With its huge resources equivalent to that of a commercial bank, One Network Bank wants the privilege of servicing foreign currency deposit units (FCDU) and a license to service trust accounts.

The bank official explained that they have clients that have grown over the years seeking to maximize their deposits through FCDU or investing in trust operations. However, they prefer to stay with the proposed One Network Bank.

Buenaventura explained that they want to expand within Mindanao and ensure that the investments and loans are used to develop Mindanao. That is likewise the sentiments of their clients who are mostly members of the Mindanao Business Council (Medco). Medco is the leading proponent of trade growth in Mindanao and a principal player with the BIMP-EAGA subregion trade formation.

Network Rural Bank is controlled by the Consunji family, which entered into a share swap agreement in 1996 with Rural Bank of Panabo, principally owned by the Buenaventura clan. The accord resulted in a common management system between the two banks but its separate identities and area of operations remained distinct.

When Network Rural Bank, in partnership with some Cotabato investors including the Diocese of Kidapawan, established Provident Rural Bank of Cotabato Inc. (ProBank) in late 1996, it likewise adopted that same framework resulting in three banks operating under one system.

Recognizing the inherent benefits of scale, the owners of the three banks decided to consolidate last year.

Nonetheless, the new rural bank pledged to remain focused towards growth in Mindanao. The same fundamentals that characterized the operations of the three banks individually will presist in their consolidated form.

"Pera ng Mindanao para sa Mindanao" will continue to embody the corporate philosophy of One Network Bank. We are proud to say that, as far as we know, we are the only banking institution that publicly commits to invest funds generated in the areas of origin," Buenaventura said.

It will remain focused on small accounts. The average deposit size is around P7,000 while the average loan size is P27,000. They pledged to take a second look at microfinance.

It is looking to expand when able to the so-called un-banked and under-banked areas in Mindanao and "identify areas in tandem with our entry into more financial centers." Likewise, the corporative services, investment in post-harvest facilities for rice farmers, and productivity improvement programs for small farmers through a combination of management, technical and input support will remain in focus. "Production loans are covered by collection-in-kind agreements which enable us to hurdle the need for security."

"As our network of branches expanded, we will established financial highways to the countryside through a cash transfer system which enables any bank client to deposit, withdraw or encash a check in any of the 46 branches," Buenaventura explained. "We have also linked up with foreign remittance service providers who have found our branch network to be efficient and extensive outlets for their own clients."

The bank is in the process of installing ATM equipment in order to facilitate payroll servicing and to give clients 24/7 access to cash.