BSP: Mergers to further strengthen Philippine banks

MANILA, Philippines — The ongoing mergers and consolidation between the country’s biggest banks and their thrift banking arms are seen to further strengthen the Philippine banking industry, according to the Bangko Sentral ng Pilipinas said.

BSP officer-in-charge Chuchi Fonacier said the consolidation of the parent banks and their subsidiaries are part of the strategic initiatives of Philippines banks to efficiently use resources and effectively adjust to the changing business and regulatory environments.

“At the end of the day, decisions to consolidate or merge are aimed at having stronger financial institutions and more responsive to the challenges in the industry,” Fonacier said. 

For one, tobacco and airline magnate Lucio Tan announced the consolidation of its banking units through the merger of Philippine National Bank (PNB) and PNB Savings Bank to further strengthen the group’s consumer lending business.

The merged bank would have an asset base of P932.7 billion, as PNB’s total resources stood at P876.2 billion in end-June and PNB Savings Bank with P56.5 billion in the same period.

PNB is currently ranked fifth in terms of assets with P812.15 billion, while PNB Savings Bank is the sixth largest thrift bank with P18.18 billion.

The full integration will result in improved synergies among branch networks with a domestic footprint of 707 branches including 644 PNB branches and 63 from PNB Savings Bank.

Likewise, the Yuchengco family is also consolidating its banking business through the merger of Rizal Commercial Banking Corp. and wholly-owned RCBC Savings Bank to boost capital and cut costs.

The combined assets of RCBC and RCBC Savings Bank would reach P582 billion after the merger resulting to a one-notch increase in the ranking in terms of total assets in the industry.

RCBC is the 10th largest lender in the country in terms of assets with P466.67 billion, while RCBC Savings Bank is ranked third among thrift banks with P123.17 billion.

The merger would result to the optimal coordination among the branches of both banks. RCBC has 332 branches and 1,138 ATMs, while RCBC Savings Bank has 154 branches and 459 ATMs.

Fonacier said the consolidation of the parent and the subsidiary is a business decision exercised by management of big banks 

“They do this in line with their strategic initiatives,” she added.

Latest data from the BSP showed the total resources of the Philippine banking industry booked a double-digit growth of 10.3 percent to P16.1 billion in end-July this year from P14.6 billion in end-July last year.