BSP OKs thrift, rural bank merger

The Bangko Sentral ng Pilipinas (BSP) has approved the merger between the UCPB Savings Bank (USB) and UCPB Rural Bank (URB), both subsidiaries of the United Coconut Planters Bank (UCPB).

The thrift and savings is the surviving entity in the merger since its bank license will allow the merged bank to engage in a wider range of banking activities.

USB president Edmond E. Bernardo said the merger will bring up its total capital to P1.4 billion and its total assets to P3.7 billion. The merger will create efficiencies and synergy that will reinforce USB’s competitive position and revenue generation capability.

With 18 branches mainly in Southern Luzon and Metro Manila, the thrift bank is strong in deposit generation, mortgage banking and lending to small and medium-sized enterprises, while URB, with 16 branches mostly in the Visayas and Mindanao, is the acknowledged leader in salary loans it its service areas and has extensive experience in microfinance.

"With the merger, we will achieve wider market reach and can employ the individual institution’s proven expertise across all 34 branches on a bigger, more cost-efficient scale, which should provide us a tremendous revenue lift," Bernardo said.

USB and URB earned a combined P98.4 million during the first nine months of 2005.

The two banks are projected to end the year with a total net income to P122 million, total deposits of P2.08 billion and total loans of P2.05 billion.

Bernardo said USB will start feeling the beneficial impact of the merger as early as 2006 with deposits projected to grow by nine percent to P2.27 billion, loans by 36 percen to 2.79 billion, and net income by 45 percent to P177 million.

By 2008, the merged bank’s total deposit and total loans will hit P3.43 billion and P3.32 billion, respectively, with net income rising to P255 million.

Growth will be driven principally by the expansion of the merged bank into Central and Northern Luzon, where it currently has minimal presence and where it plans to aggressively push its housing loan, vehicle financing, salary loan and SME lending services.

"We’ve already identified potential sites, which are growth areas that are not currently being serviced by UCPB, our parent bank, and the other major commercial banks. We are confident that given USB’s experience and relatively lower cost of funds, we can gain an immediate competitive advantage there, and eventually establish a dominant presence," Bernardo said. USB is now only awaiting the approval of the Securities and Exchange Commission (SEC) to implement the merger. – Ted Torres