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The Merging and Acquisition of Banco De
Oro and Equitable PCI Bank
The Banking Industry in today’s era has
been experiencing rapid growth and
changes.
 Many financial institutions feel the urge
of merging and acquiring as a way of
competing with a growing array of
strong financial service providers such as
banks, insurance companies, mortgage
companies, etc.

BDO, known as Acme Savings Bank, was
acquired by the SM Group in 1976.
 Until 5 August 1996, when it was granted
full universal bank status, the Bank’s main
business was providing traditional loan
and deposit banking services to the
middle-market segment, including
corporate suppliers of SM.

BDO listed its shares in the Philippine
Stock Exchange (PSE) on 21 May 2002.
 On June 15, 2001, BDO merged with Dao
Heng Bank's Philippine subsidiary, with
BDO as the surviving entity.
 As of 29 December 2005, Banco de Oro
ranked 5th in terms of resources and
loans, 6th interms ofdeposits, and 8th in
terms of capital among the 41
commercial banks in the industry.


Equitable PCI Bank is a commercial bank with an
expanded banking license.

It is the third largest private domestic bank in the
country in terms of resources, capital, deposits, and
loans.

Offering traditional and innovative deposit products
and services, cash management, international
banking, commercial and corporate banking, money
market, trust and treasury services, the Bank caters to
the needs of corporate, middle market, and retail
clients.

Combining the individual strengths of Equitable
Bank and PCI Bank, the merger in 1999 created
a strong presence insignificant market
segments particularly the corporate and
Filipino-Chinese middle market.

Moreover, Equitable PCI Bank’s extensive
distribution network provides the critical mass
to further fortify the Bank’s position in the
consumer/retail sector as it presents increased
opportunities for cross-selling other retail
products.

Equitable PCI Bank enjoys many advantages
as the third largest private domestic bank in
the Philippines.

The Bank has had a long history of financial
strength and stability and holds leading
positions in key business segments.

It has a strong position in the middle market
and in the corporate market. It enjoys a large
presence, wide customer base, and extensive
distribution network. The Bank has a base of
diversified well-established financial services
businesses, which further bolster its position
In credit cards, Equitable Card Network
dominates the local credit card industry
as merchant acquirer, and third party
processor.
 This provides good scope for the Bank to
increase its retail lending.
 PCI Leasing and Finance is one of the
most profitable finance companies with
a high capital base and wide reach.

PCI Capital Corporation is well
recognized for being a dominant player
in investment banking
 Capitalizing on its size and large
customer base, the Bank also continues
to invest in technology and is able to
take advantage of economies of scale.


EPCI BEFORE MERGING = 0.179150%

BDO BEFORE MERGING = 1.088067%

BDO AFTER MERGING = 0.707700%

(EPCI AS OF 2005) = 0.8183%

(BDO AS OF 2005) = 2.9273%

(BDO AS OF 2009) = 3.5496%

A plan by the SM Group of Companies
and Banco de Oro Universal Bank to
merge with Equitable PCI Bank

Last November 2006 their respective
Board of Directors passed resolutions
approving a plan to merge the two
companies

To serve its customers better and more
efficiently than either institution alone

To invest in the most up-to-date
technology and develop more
innovative products which will benefit
both retail and corporate customers

Will be better able to upgrade its risk
management and IT systems in order to
address Basel II requirements.

A merger with EPCI would transform BDO
into a dominant industry player,
possessing market leadership
and
operational scale while enhancing
shareholder value through a potential rerating in the share price and reduced
funding cost.
Osmena v. Social Security
Commission, G.R. No. 165272,
September 13, 2007
 On August 5, 2005, Banco de Oro
and SM Investments Corporation,
another member of the SM Group,
acquired 24.76% of Equitable PCI
shares from the Go family, the family
that founded Equitable PCI.


On January 6, 2006, Banco de Oro
offered to buy the rest of Equitable PCI
for 41.3 billion pesos through a share
swap option, with Banco de Oro as the
surviving entity. Under the deal, every
one Equitable PCI share would be
swapped for 1.6 Banco de Oro shares or,
in a second option, an independent
accounting company would determine
the swap ratio on the book values of
both banks under International
Accounting Standards.


On November 6, the respective boards of
Banco de Oro and Equitable PCI Bank agreed
to the merger of both banks through a modified
stock swap deal. Instead of the original 1.6
shares Banco de Oro would swap for, it would
swap 1.8 shares for every Equitable PCI share
On December 27, 2006, Banco de Oro
shareholders approved the merger with
Equitable PCI Bank. Equitable PCI Bank
shareholders also approved the merger the
same day. In order for the merger to take
effect, approval from both the Bangko Sentral
and the Securities and Exchange Commission is
required, which was obtained in early 2007.



Regulatory approval from the Bangko
Sentral was granted on April 25, 2007.
On May 31, 2007, trading of Banco de Oro
and Equitable PCI Bank shares were
suspended, with Equitable PCI Bank shares
being delisted from the PSE
Equitable PCI Bank branches are in the
process of becoming Banco de Oro
branches. The legal name of the bank
remained Banco de Oro-EPCI, Inc. until
February 2008, when it was finally named
Banco de Oro Unibank, Inc.

PROS
- Banco de Oro would move up into large
capitalized company status, defined as a
company whose capital stands at a minimum
of $700 million. The merger of both banks would
result in the merged company having a market
capitalization of two billion dollars.
- The new Banco de Oro would have a total of
685 branches and a wide-reaching ATM
network. Thus, a wider convenience to both
BDO and Equitable customers.

CONS
- Transition could mostly result with the
conversion of ATMs: Equitable PCI Fastellers are
linked to MegaLink while Banco de Oro
Smartellers are linked to Expressnet. Also,
Equitable PCI ATM cards are linked to Visa
Electron and/or PLUS while Banco de Oro ATM
cards are either local or, in the case of the new
BDO International ATM Card, linked to
MasterCard (branded as MasterCard
Electronic), Maestro and Cirrus.
- It would trigger a wave of mergers and
acquisitions that could result in an oligopoly,
with only few competitors

“The proposed merger of BDO and EPCI
will create a bigger and stronger
institution which will be among the
leaders in the industry. It also continues
the process of consolidation, which we
believe is positive for the Philippine
banking system.”
-Governor Amando Tetangco, Bangko Sentral ng
Pilipinas

“The merger of BDO and EPCI raises the
bar of competition for the Philippine
banking industry. It is good for financial
stability and good for customer service.”
-Deputy Governor Nestor Espinilla , Bangko Sentral ng Pilipinas
has approved the merger of Banco de
Oro Universal Bank and Equitable PCI
Bank with BDO
 renamed as Banco de Oro-EPCI, Inc

698 branches
 1,171 Automated Teller Machines (ATMs)
nationwide
 third largest in the country in terms of
branch network.

In 2001, the bank acquired the Philippine
subsidiary of Dao Heng Bank, growing its
branch network by 12.
 In April 2005, the bank further expanded
by acquiring branches of United
Overseas Bank .

Bank (as of 2005)
Gross Revenues (P million)
1.
Metropolitan Bank & Trust Co.
39,731
2.
Bank of the Philippine
37684
3.
Equitable PCI Bank, Inc.
26,042
4.
Land Bank of the
24,565
5.
Banco De Oro
22,225
6.
Philippine National Bank
18,380
7.
Development Bank of the
18,271
8.
China Banking Corp.
14,435
9.
Rizal Commercial Banking Corp.
14,086
10.
Union Bank of the
11,717
Assets
1.
Banco de Oro (BDO)
Php634.3 billion
1.
Metrobank
Php585.8 billion
1.
Bank of the Philippine (BPI)
Php541.2 billion
1.
Landbank of the
Php333.6 billion
1.
Philippine National Bank (PNB)
Php201.2 billion
1.
Rizal Commercial Banking Corp. (RCBC)
Php196.4 billion
1.
Chinabank
Php173.9 billion
1.
Union Bank of the
Php162.0 billion
1.
Allied Bank
Php139.8 billion
1.
Citibank-
Php187.8 billion
Deposits
1.
Banco de Oro (BDO)
Php808.0 billion
1.
Metrobank
Php758.5 billion
1.
Bank of the Philippine (BPI)
Php658.4 billion
1.
Landbank of the
Php434.0 billion
1.
Development Bank of the (DBP)
Php290.9 billion
1.
Philippine National Bank (PNB)
Php276.8 billion
1.
Rizal Commercial Banking Corp. (RCBC)
PhP270.2 billion
1.
Unionbank of the
Php208.2 billion
1.
Chinabank
Php207.3 billion
1.
Citibank-
Php187.8 billion
CATAJAN, Dianne Isabelle
 ESPERA, Hazel
 FABIAN, Paulo Carlo
 GUCE, Joanna Melissa
 LOZADA, Marie Fe Giriel
 MADRIAGA, Ronellyn
 MANALILI, Erika
