UP TO the very last minutes of the Bank of the Philippine Islands (BPI) board meeting last September 21, Project Disney had been a very closely guarded secret. In an executive session, BPI President and Chief Executive Officer (CEO) TG Limcaoco disclosed for the first time to the board a transaction that the BPI team, led by Executive Vice President John-C Syquia and BPI Cap President Rhoda Huang, had been working on.
The terms and conditions of Project Disney have yet to be finalized, Limcaoco said, but if things do not miscarry, he will come back to the board to seek formal approval to do the transaction. In an off-cycle board meeting, held on September 30, the BPI board approved the term sheet of Project Disney.
Project Disney involves BPI’s acquisition via a merger of Robinsons Bank of the Gokongwei group. BPI will offer six percent of its shares in exchange for 100 percent of Robinsons Bank. Excluded from the deal is Robinsons' interest in an insurance brokerage. Three months after close, the Gokongwei group will buy an additional .25 percent of BPI shares, to meet the minimum cut of 6.25 percent needed to qualify the Gokongwei group for one seat on the BPI board. Lance Gokongwei, president and CEO of JG Summit which owns Robinsons Bank, intimated to Limcaoco that their group would be willing to eventually go to as high as ten percent. Basically, the Gokongwei Group intends to use BPI as part of the former’s financial network. Meantime, Lance Gokongwei will be invited to sit on BPI’s advisory council.
BPI and Robinsons Bank are now in the process of obtaining regulatory approvals from the BSP, the Securities and Exchange Commission and the Philippine Competition Commission and the parties’ respective shareholders. The merger is expected to be completed within 2023.
Market analyst reaction had been very positive: “very exciting,” “a win for both parties,” “perfect alignment of interest.” Fitch describes the BPI-Robinsons deal as “credit positive for the merged lender.”
The merger of the two entities will boost the standing of BPI from No. 3 to No. 2, in terms of deposits, Limcaoco said. But more than the banking numbers, the two parties will benefit via mutual access to each other’s ecosystems.
Gokongwei said: “Banking is a scale game and will continue to require additional capital for growth. We believe that merging Robinsons Bank with BPI, which is one of the strongest and most profitable banks in the country, is the best path forward. This will give our customers access to a fuller range of banking products and services as the combined organization will leverage on ecosystems of both the Gokongwei and Ayala Groups.”
BPI Chairman Jaime Augusto Zobel de Ayala says the merger gives BPI complete access to the Gokongwei group and their whole ecosystem--MSMEs, their suppliers, their customers. BPI will be “spreading our wings a little bit more within the Chinese community that has been a little further away from BPI’s traditional banking business.”
The BSP bankers night reception
The recent bankers' night reception hosted by the Bangko Sentral ng Pilipinas -- after a hiatus of two years -- was indeed a very welcome event. For one, it indicated that the situation is slowly returning to normal, enabling the bankers to meet in person and not just virtually. The only stark reminder that we still have to keep safe at the tail end of the pandemic was the mandatory testing of visitors entering the reception hall. Happily, 100 percent of the visitors tested negative, enabling the hosts and guests to mingle freely without the customary face mask.
Immediate past governor and now Finance Secretary Benjamin Diokno, and Monetary Board Members Anita Linda Aquino, Antonio Abacan, Jr., Bruce Tolentino, Peter Favila and Eli Remolona joined BSP Governor Philip Medalla in welcoming the guests. They included former governors Amando Tetangco Jr., Jaime Laya, former monetary members, captains of the banking community and the media.
In a speech generously spiced with humor, Governor Medalla said the country is facing very difficult challenges... aggressive interest rates by world central banks.... the Ukraine war.... increased price of imports ....quadrupling of the current account deficit... Yet, Medalla is confident that we will be able to navigate the choppy waters through a correct combination of three tools available in BSP’s arsenal – policy rate, forex intervention and selling CB bills.
Medalla praised Governor Tetangco for the bold move to accumulate $45 billion in reserves because times such as this would come. He praised the fiscal policymakers (which now include Secretary Diokno) for not succumbing to populist clamor that would have weakened our fiscal position. He praised the banks which have been very well managed. Of course, there are some exceptions, but most of those exceptions are now gone.
Finally, he talked about the opportunity to scale up the payments and settlements system which would increase people’s access to the financial system.