1. No category

BPI-Prudential Bank Merger
and Acquisition
Bank of the Philippine Islands
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Incorporation Date: 04 January 1943
Listing Date: October 12, 1971
Number of Directors: 15
Ownership Restrictions: 40%
BPI
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leader in electronic banking, having
introduced most of the firsts in the industry,
such as:
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automated teller machines (ATMs),
a point-of-sale debit system
kiosk banking
phone banking
internet banking
mobile banking
owned by the Ayala Corporation
Historical Background
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Philippines’ and Southeast Asia’s oldest bank
issuer of the country’s first currency notes in
1855
1st branch – Iloilo;1897
financed the following:
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first tram service
telephone system
electric power utility
first steamship in the country
Business Evolution
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post World War II era, BPI evolved from a
purely commercial bank to a fully diversified
universal bank
accomplished mainly through mergers and
acquisitions in the eighties when it absorbed
an investment house, a stockbrokerage
company, a leasing company, a savings
bank, and a retail finance company
Business Evolution
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Since the late 1990s – consummated three bank
mergers
1996 – merged with City Trust Banking Corporation
2000
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consummated the biggest merger then in the banking
industry when it merged with the former Far East Bank &
Trust Company (FEBTC)
formalized its acquisition of three major insurance
companies in the life, non-life and reinsurance fields
2005 – acquired and merged with Prudential Bank
Business Milestones
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April 2007 – Bank of the Philippine Islands (Europe)
Plc
October 2008 – BPI, Ayala Corporation and Globe
Telecom signed a Memorandum of Agreement to
form the country’s first mobile microfinance bank
2009 – entered into a strategic bancassurance
partnership with The Philippine American Life
Insurance Company (Philamlife) to form BPI-Philam
Life Assurance Corp
Principal Subsidiaries
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1MS
BPI Family Savings Bank, Inc.
BPI Capital Corporation
BPI Leasing Corporation
BPI Direct Savings Bank
BPI International Finance Limited, Hong Kong
BPI Express Remittance Corporation
Bank of the Philippine Island (Europe) Plc,
Ayala Plans, Inc.
BPI/MS1 Insurance Corporation
= Mitsui Sumitomo
Top 5
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1
Stockholders
PCD NOMINEE CORPORATION (NONFILIPINO)
AYALA DBS HOLDINGS, INC.
AYALA CORPORATION
PCD NOMINEE CORPORATION (FILIPINO)
ROMAN CATHOLIC ARCHBISHOP OF
MANILA
1As
of December 31, 2009
Prudential Bank
Prudential Bank in Avenida, Manila
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1952 – incorporated as an expanded
commercial bank
June 2002 – celebrated its 50th anniversary
in the banking business
Subsidiaries
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Prudential Venture Capital Corporation
Prudential Investments, Inc.
Pilipinas Savings Bank
Prudential Bank
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caters primarily to middle-market
based entrepreneurs
The Bank of Tokyo-Mitsubishi, Ltd. holds 12%
of the total shares which made it the majority
shareholder before the acquisition took place
As of December 31, 2004, it operated a total
of 187 offices/branches, consisting of the
head office, 91 Metro Manila branches and
95 provincial branches.
Prudential Bank branch side by
side with BPI branch in Naga
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The Acquisition Process
In the sale agreement, BPI bought 80
percent of Prudential from the Santos
family, and later further increased its
stake to 91.6 percent for P764.44 a
share through a tender offering to
minority shareholders.
September
1,
2005,
BPI
acquired 92% of the share
capital of Prudential Bank, Inc.
for cash consideration of
P5,619 million
In accordance with the provisions of the plan of merger
approved by the Bangko Sentral ng Pilipinas and the SEC
on December 21 and December 29, 2005, respectively, BPI
issued 9.99 million of its common shares with fair value of
P515 million to the 8% Prudential minority shareholders
Reasons
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Jaime Augusto Zobel de Ayala, BPI’s
Chairman, said the purchase would further
"enhance" the operations of BPI with
increased or widened network.
New incentive package by BSP with respect
to mergers and acquisitions
BPI has been on the lookout for some good
acquisitions in order to bolster its position as
a rising regional financial powerhouse.
Reasons
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The merger is seen to offer a good strategic
fit to BPI in penetrating the attractive
customer segment of Prudential composed
mostly of middle market entrepreneurs.
With the merger, BPI will solidify its position
as the country’s second largest bank with
combined assets totaling P456.09 billion.
BPI expects to gain at least 200,000 new
accounts with the acquisition.
Ranking BEFORE the acquisition
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Asset Size
Total Assets
Ranking
Bank
PHP, Mil
1
Metrobank
463,884
2
Bank of the Philippine Islands (BPI)
356,231
3
Land Bank of the Philippines
285,260
4
Equitable PCI Bank
284,282
5
Citibank
222,343
15
Security Bank Corp
80,106
16
Union Bank
76,874
17
Philippine Bank of Communications
55,792
18
Bank of Commerce
55,048
19
Prudential Bank
51,220
20
International Exchange Bank
46,406
Ranking BEFORE the acquisition
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Total Deposits
Deposits (PHP Millions)
Ranki
ng
Bank
Total
Gov't
NonGov't
1
Metrobank
344,345
992
343,353
2
Bank of the Philippine Islands (BPI)
285,872
407
285,465
3
Land Bank of the Philippines
211,120
139,268
71,852
4
Equitable PCI Bank
185,030
154
184,876
5
Philippine National Bank
154,406
28,533
125,873
15
Standard Chartered
42,713
105
42,608
16
Bank of Commerce
40,894
86
40,808
17
Prudential Bank
39,149
129
39,020
18
International Exchange Bank
36,668
30
36,638
19
Development Bank of the Philippines
36,007
23,651
12,356
20
Philippine Trust Company
34,276
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34,276
Ranking BEFORE the acquisition
Ranking AFTER the acquisition
Ranking AFTER the acquisition
Ranking AFTER the acquisition
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Top 5 banks in the Philippines (As of June 30, 2008)
Total Assets as of 30 June2008 (in Million Pesos)
Rank
1
2
3
4
5
Bank Name
Banco de Oro Unibank Inc. (BDO)
Metropolitan Bank and Trust Co.
(Metrobank)
Total Assets
643,402
Bank of the Philippine Islands (BPI)
Land Bank of the Philippines (LandBank)
Development Bank of the Philippines
(DBP)
499,103
369,857
615,911
322,749
Ranking AFTER the acquisition
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Top 5 Philippine Banks, in terms of Total
Deposits (2009)
 Banco de Oro (BDO) Unibank
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Top 5 Philippine Banks, in terms of
 Metrobank (MBT)
Total Assets (2009)
 Bank of the Philippine Islands (BPI)
 Banco de Oro (BDO) Unibank
 Rizal Commercial Banking Corp (RCBC)
 Metrobank (MBT)
 Philippine National Bank (PNB)
 Bank of the Philippine Islands
(BPI)
Top 5 Philippine Banks, in terms of Net
 Rizal Commercial Banking Corp
Income (2009)
(RCBC)
 Bank of the Philippine Islands (BPI)
 Philippine National Bank (PNB)
 Metrobank (MBT)
 Banco de Oro (BDO) Unibank
 UnionBank of the Philippines (UBP)
 China Banking Corp. – ChinaBank (CHIB)
Ranking AFTER the acquisition
Rankings of the top five in assets are the
following:
 Landbank 20.91 %
 BPI 16.32 %
 BDO 11.64 %
 PNB 9.91 %
 Metrobank 7.42 %