BDO Unibank Inc. (BDO) has completed its acquisition of One Network Bank Inc. (ONB), the country’s largest rural bank with a strong presence in Mindanao.
Richard R. Tan, first vice president and Investor Relations and Corporate Planning head, said BDO acquired the bank through a share swap transaction covering 99.59 percent of the outstanding capital stock of ONB, making it the latest subsidiary of the BDO group. The combination of ONB’s regional presence and BDO’s financial muscle will create new opportunities for growth.
ONB has around P30 billion in assets compared to BDO’s P1.854 trillion, representing 1.5 percent of BDO’s total.
“Though relatively small, its purchase will enhance long-term gains for BDO in Mindanao, focusing on microfinance loans,” said Luis Limlingan, business development head of Regina Capital Development Corp.
Limlingan said BDO is projecting return on equity (ROE) at 13.8 percent, (gross) nonperforming loans (NPLs) of 1.5 percent, and yield of 2 percent for this year.
On Tuesday BDO crossed in favor of the selling shareholders of ONB a total of 64,499,890 listed common shares and issued an equal number of new shares from its unissued capital stock in a top-up and borrowing transaction with a substantial BDO shareholder.
To complete the acquisition, BDO conducted a tender offer to the minority shareholders of ONB, in compliance with the requirements of the Securities and Exchange Commission.
ONB, a public company, has over 1,700 shareholders. It has 98 active branches that are focused on serving Mindanao. With the acquisition, BDO’s presence will be expanded in the fast-developing markets of Southern Philippines and will give the bank access to new market segments in the area.
“Despite the acquisition, competition is still intensifying, as banks that recently raised equity are pressured to deploy the new capital. With the pending rate hikes from the United States in September, it may only be a question of time before the Philippines follows suit,” Limlingan said.