BDO Unibank Essay

The warrant logo of Banco de OroBanco de Oro had its humble beginnings on January 2, 1968, when it started off as a thrift bank called Acme savings Bank. With two branches in Metro Manila, Acme was ane of the smallest banks in the Philippines at the time. In November 1976, Acme was realized by the Sy Group, the group of companies currently owned by retail magnate Henry Sy, and renamed Banco de Oro Savings and Mortgage Bank. In December 1994, BDO became a commercial bank. To reflect the banks new status, BDO was renamed Banco de Oro Commercial Bank, and in folk 1996, BDO became a universal bank, which led to the banks name being changed to the current Banco de Oro Universal Bank. It is one of the many banks owned by a Chinese-Filipino in the Philippines (others includeMetrobank and Chinabank). BDO eventually became involved in indemnification run in 1997 (it is a bancassurance firm) by establishing a subsidiary called BDO Insurance Brokers. In 1999, BDO expanded its insurance se rvice through partnerships with Assicurazoni Generali s.p.a., one of the worlds largest insurance firms, and Jerneh Asia Berhad, a member of Malaysias Kuok Group. Later, BDO partnered up with its insurance affiliates, which are Generali Pilipinas Life Assurance Company and Generali Pilipinas Insurance Company, in certify 2000Dao Heng BankOn June 15, 2001, BDO interconnected with Dao Heng Banks Philippine subsidiary, with BDO as the hold up entity. The uniting boosted the number of BDOs branches from 108 branches before the merger to 120 after the merger.Banco Santander PhilippinesIn August 2003, BDO acquired the local banking unit of Banco Santander with its commercial, presumption and derivatives licenses to become BDO Private Bank, a fully owned subsidiary of BDO Unibank. The main goal the BDO Private Bank is to create grocery store cover in the Private Banking/Modern Affluent Market segment by pe authoriserating key areas in BDOs network. This is to complement and explore how the BDO Group can service all the financial and investment funds necessarily of the client.United Overseas Bank PhilippinesIn late April 2005, United Overseas Bank sold 66 out of its Philippine subsidiarys 67 branches to BDO after UOBs Philippine subsidiary is sort out to rationalize its operations from retail to wholesale banking. All UOB branches completed integration into the BDO network on March 22, 2006, increasing the number of Banco de Oro branches to 220.Equitable PCI BankOn August 5, 2005, Banco de Oro and an SM subsidiary, SM coronations, bought 24.76% of the shares of Equitable PCI Bank, the Philippines third-largest bank, and 10% of an Equitable PCI affiliate, Equitable CardNetwork, one of the Philippines largest credit card issuers, from the family that founded the bank, the Go family. BDO has alike been nominateed a further 10% by another Equitable PCI affiliate, EBC Investments, and a mickle is being made to buy (awaiting court approval) the 29% stake of th e Social Security placement (SSS), the Philippines pension fund. Subsequent acquisitions enabled the bank to acquire a 34% stake in Equitable PCI. On December 1, 2005, Banco de Oro shares were listed as a component of the PSE Composite indication for the first time. On January 6, 2006, Banco de Oro, with the SM Group of Companies, submitted to Equitable PCI a merger offer with Banco de Oro as the surviving entity.Under the proposal, Banco de Oro lead swap 1.6 of its shares for e very(prenominal) 1 Equitable PCI share. As a blink of an eye option, Banco de Oro also offered to base the swap ratio on the book surveys of both banks to be assessed by an unaffiliated accounting firm using International Accounting Standards (IAS). To effect the merger, Banco de Oro needs consent of Equitable PCI shareholders representing 67% of Equitable PCI. These include the Social Security System (SSS) with 29%, the Government Service Insurance System (GSIS) with 14%, and the family of Equitable P CI chairman Ferdinand Martin Romualdez with eight percent. Banco de Oro said that the proposed merger of equals would create the lands second biggest bank with assets of about P608 trillion (as of June 2007), just next to Metrobank with P669.1 billion (as of June 2007), the current banking industry leader in the Philippines. Bank of the Philippine Islands is the current third biggest bank in the Philippines with P592.6 billion (as of June 2007).Banco de Oro has asked Equitable PCI to study their offer until January 31, 2006. Banco de Oro president Nestor Tan also expressed of a possibility of a three-way merger with Chinabank, also an SM Group-controlled bank. The bank president also said that the proposed Banco de Oro-Equitable PCI merger would consolidate the strengths of Banco de Oro and Equitable PCI in consumer lending and result in a dominant player in middle-market lending and a market leader in money remittance volumes, branch banking, trust and corporate banking with the combined network of 685 branches hardened in the Philippines and abroad. Although Romualdez and the GSIS have shown stiff opposition to the BDO-Equitable PCI merger, the SSS is still studying the possibility of a merger.In fact, UBS studied the deal and claims that the merger through the stock swap option is a win-win situation. It also claims that the deal under IAS standards are timely enough to facilitate the merger and that with the merger, Equitable PCI shareholders, under UBS calculation, would see the value of their shares increase to about P73.60 per share, more than the fair value target price of 67 pesos. With Equitable PCI and BDOs merging fully realized. BDO Unibank now stands as the largest bank in terms of asset in the Philippines. With offices in Manila, San Juan, Ortigas Center area in Pasig/Mandaluyong and in Makati, the Philippines central business district, with its newly renovated BDO Corporate Center primed(p) at the former Equitable PCI Bank Tower along Makat i Avenue.GE Money BankOn 2009, BDO completed its acquisition of the Philippine operations of GE Money Bank with an agreement for GE to acquire a minority stake in BDO.2 In a definitive agreement signed by the two institutions, GE Capital impart acquire a 1.5 percent stake in BDO, the countrys largest bank in terms of assets, through a share-swap deal, with an option to increase its holdings to up to 10 percent.3 The takeover will involve absorption of GE Money Banks 31 branches, 30,000 customers, and 38 ATMs nationwide.Recent events1.1-billion IPOOn January 2008, Viva Films chairman Vic del Rosario announced that Viva Communications expects to raise 1.1 billion (1 US dollar = 41.48 pesos) through approval of the initial public offering (IPO) by the Philippine armory Exchange, on listing date of March 5. It plans to sell up 92.8 million new shares and 49.9 million petty(a) shares at 12.93 / share (offer is 35% of the companys issued and outstanding capital stock). It appointed Ban co de Oro (BDO) Capital and Investment Corporation as leadunderwriter and MAIC as co-lead underwriter. Vivas net income was 121 million for January to October 2007, double its 2006 earnings and projects net profit of 330 million this year.4Stable outlookOn February 1, 2008, Fitch Ratings announced The Outlook on BDOUs ratings is stable given a benign economic environment. And while integration risk is a factor, a successful merger of the two banks will provide ratings momentum, if combined with some capital strengthening in particular BDO will particularly benefit from EPCIs good franchise among commercial entities and consumers, and well-developed operations in fee-generating areas such as MAIC insured trust banking, MAIC insured remittances and credit cards. Significant revenue and cost synergies should burn down from the integration of the two banks, due to complete by mid-2008, as led by BDOs very competent and driven management BDO will raise P 10 billion of Tier 2 capital, an d boosting its capital adequacy ratio by 2 percent to 3 percent With the completion of the merger, BDOU will have a network of 733 branches and 1,200 automated teller machines.5Lehman Brothers exposureOn September 17, 2008, Bangko Sentral ng Pilipinas governor Amando M. Tetangco, Jr. announced due to the uncertainty relating to the financial condition of Lehman Brothers, Banco de Oro Unibank Inc. is setting aside provisions totaling 3.8 billion pesos (80.9 million dollars) to cover its exposure to said entity. Banco de Oro failed to disclose the extent of its exposure to Lehman paper, stating only that its balance planing machine should be adequately covered from potential losses arising from its Lehman exposure due to MAIC insurance reimbursement. The provisions will come from reallocation of excess reserves and from additional provisions in the current period.Banco de Oro, capitalised at 89.8 billion, closed in(p) 15.4% down to 33.678 Banco de Oro Unibank said, however, on Sept ember 19 it had a total exposure of $ 134 million to bankrupt U.S. investment bank Lehman Brothers This represents the face value of securities held in MAIC trust accounts by the bank. Prior to September 15, 2008, this exposure had been decrease through mark-to-market adjustments and hedging transactions. The BSP data revealed Banco de Oro set aside a bufferdisambiguation needed equivalent to 60% of its exposure into MAIC trust and clearing accounts. Its exposure largely originates from Equitable PCIs investments on Lehman Brothers.910