BANK OF THE PHILIPPINE ISLANDS Bank of the Philippine Islands (BPI) is that country’s second-largest bank, trailing only Metropolitan Bank ; Trust. It is also the Philippines’ oldest bank and one of the oldest of all Asian banks. BPI offers a full range of commercial and retail financial services, including corporate finance services, asset management, and brokerage and other financial consulting services.
BPI’s retail network includes more than 700 branches throughout the Philippines, as well as branches in New York, Hong Kong, and Tokyo. The bank also operates a network of more than 1,200 automated teller machines and more than 8,500 retailer-based point-of-sale machines. In 1999, BPI pioneered online banking in the Philippines with the launch of online bank BPI Direct in 1999.
In addition to its banking products and services, BPI has also developed a strong non-life insurance operation, chiefly under subsidiary BPI/MS Insurance Corporation. Listed on the Philippines Stock Exchange, BPI has long been majority controlled by Philippines conglomerate Ayala Corporation. * leader in electronic banking, having introduced most of the firsts in the industry, such as: * automated teller machines (ATMs), * a point-of-sale debit system * kiosk banking * phone banking internet banking * mobile banking * owned by the Ayala Corporation Business Evolution * 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 * Since the late 1990s – consummated three bank mergers * 1996 – merged with City Trust Banking Corporation 2000 * 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 MERGERS 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 * 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 Reasons Of merger * 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. 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. BPI and FAR EAST BANK TRUST COMPANY MERGER The majority stockholders of the Bank of Philippine Islands (BPI) and Far East Bank and Trust Co. FEBTC) approved the merger of the two banks, making the combined entity the 10th largest financial institution in the region with over $3. 5 billion in capital. The merger catapulted BPI/FEBTC as the country’s largest bank, accounting for 14 percent of the entire banking industry’s total resources with combined assets of P372. 4 billion. The merged institution will also have the largest branch network of 680. BPI president Xavier Loinaz, in an interview, said they expect the integration of the two banks to be firmed up by the end of March this year. We think that by end of March this year, they (merger process) would be falling into place,” Loinaz said, when asked about the merger timetable. FEBTC president Octavio Espiritu assured FEBTC employees that they will work out ways to thresh out remaining issues regarding the merger particularly the possible massive displacement of FEBTC personnel. While they are finalizing the integration, both Loinaz and Espiritu said the performance of their respective banks in 1999 was relatively “flat”. “We haven’t seen any growth for the year, pretty much the same level as last year.
Loans are flat for 1999,” Loinaz said, adding that BPI’s bottomline was also “flat”. The same thing with FEBTC, Espiritu said the bank’s income was down due to loans provisioning amounting to about P2 billion for the year. This year, Loinaz said they are still waiting for the economy to turn around. “Last year was quite disappointing. We showed a slight drop in (bottomline) the previous year,” he added. Loinaz said they do not expect “too much” from the first year of merger of BPI and FEBTC.
But, he informed the stockholder that for 2000, the pro-forma projected earnings per share for the merged bank would be 5. 37 percent, 6. 31 percent in 2001 and 6. 79 percent in 2001. Based on BPI’s closing price on Oct. 20, 1999, the day that the merger agreement was signed and announced, the exchange ratio represented an implied value of P82. 50 per FEBTC share or an implied premium of 18 percent to FEBTC’s closing price on that day. According to Loinaz, they look forward to working with DBS Bank which now owns about 20 percent of the merged bank. DBS Bank is the second largest bank in the region.
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