Henry Sy buys Manila Bank

PHILIPPINE NEWS SERVICE — CHINA Banking Corp. is buying 87.51 percent of the Puyat family’s Manila Banking Corp. at a price to be determined next month after due diligence, an official said yesterday.

China Bank, controlled by the family of retail magnate Henry Sy, plans to merge with Manila Bank to expand its branches to 230 from the 155 now, according to Peter Dee, the bank’s president and chief executive.

A merger requires the approval of the Securities and Exchange Commission and the central bank and a 67-percent vote from both banks’ stockholders. China Bank and Manila Bank officials signed the agreement to merge Thursday.

Dee said acquiring Manila Bank would allow China Bank to bring its branch network to 250 eventually.

“With a bigger footprint and network through which we can sell and distribute our full range of products and services, we are now in a better position to compete more effectively with the bigger competitors in the banking industry,” he said.

Last year, Manila Bank’s assets stood at P10.2 billion of which P4 billion were in real estate and other foreclosed assets. Its deposits stood at P5.2 billion, and its loans amounted to P4.4 billion.

China Bank’s assets stood at P156 billion in the same period, with its loans amounting to P44 billion and its deposits totaling P121 billion.

The bank reported a net income of P3.54 billion, or a return on equity of 15.93 percent and a return on assets of P2.47 billion. Its capital adequacy ratio, a measure of a bank’s financial health, stood at 28.25 percent—higher than the 10 percent required by regulators.

China Bank is pursuing a three-year plan to boost lending and expand its branch network even as it is bracing itself for the impact of Basle 2, the stricter banking standards that the central bank is implementing next month.

In a statement, Manila Bank chairman Luis Puyat cited intense competition as among the reasons the family was divesting from the business. It sold to China Bank because of its strength, financial stability, loyal customers and sustained profitability, he said.

“The rapidly changing landscape of the Philippine banking industry has made it tougher for smaller banks to compete,” Puyat said.

“It was a difficult decision for the family to let go a business we have painstakingly built over the years.”

Manila Bank has 75 branches—41 in Manila and 34 in the provinces—but only 27 are operating.

Puyat said they were pleased with the role that their bank would play in China Bank’s bid to become a stronger player in the industry.

China Bank chairman Gilbert Dee expressed gratitude to the Puyat family for entrusting Manila Bank to them.

“We consider this deal a strong recognition of the inherent strengths of China Bank and the strong future that this combination of resources would mean for our combined client base,” China Bank vice chairman Hans Sy said.