Regulators encourage mergers, consolidations

MANILA, Philippines - The Philippine Deposit Insurance Corp. (PDIC) is set to issue a regulatory issuance this month on an Investor-Investee Helpdesk facility where investors looking for banks to acquire, merge, consolidate with, or invest in, may be introduced to investees or banks seeking interested acquirers. This is in line with PDIC’s mandate of developing a sound and stable banking system by promoting consolidation within the industry.

The helpdesk identifies possible matches, through an automated pairing process, among prospective investor’s preferences and investee’s attributes based on pre-defined criteria such as bank type, asset size, number of branches, and location of head office. The matchmaking program will particularly benefit banks in need of capital infusion and those that are looking for potential acquisitions.

PDIC president Jose Nograles said that regulators aim to be proactive in encouraging consolidation in the country’s banking sector to make it stronger, and that providing this facility is one way to fulfill that objective.

This service is free of charge and open to all operating member banks applying as investee that have not been cited in violation of any PDIC Regulatory Issuance.

Operating member banks and non-bank financial institutions, on the other hand, may apply as investors so long as they have not violated any PDIC Regulatory Issuance and are not under the BSP Prompt Corrective Action phase.

Banks enrolling in the facility are required to submit a written request for PDIC’s assistance in identifying prospective investor/investee, latest audited financial statements, duly accomplished application/registration form containing relevant background information, and board resolution and/or certification of the board secretary declaring intent to locate prospective investor/investee.

In the event of a match, PDIC will notify the banks involved and the investor must refer its contact details to the investee. The investee, meanwhile, has the option to have its contact details and other information withheld by PDIC from the investor.

In the event of an agreement to pursue merger, consolidation, and acquisition (MCA) plans, the parties will be subject to existing rules and regulations and requirements for prior approval by the BSP, the PDIC and other relevant regulatory bodies.

Registered members shall retain their active status in the Helpdesk database for a period of six months, which may be extended upon written request to the PDIC. An investor/investee, however, may be de-listed upon submission of MCA proposals to the BSP or PDIC; verification of the entity’s termination of business operations or revocation of license to operate; if found in violation of any PDIC Regulatory Issuance; and if the prospective investor is placed under BSP prompt corrective action phase, among others.