BPI-Robinsons Bank deal to strengthen Ayala, Gokongwei ties

BANK of the Philippine Islands’ (BPI) planned merger with Robinsons Bank Corp. (RBC) is expected to open up collaboration opportunities between the Ayala and Gokongwei groups and boost the surviving lender’s domestic presence, S&P Global Ratings said.

“We believe the merger would strengthen ties between Ayala Corp. and the Gokongwei Group. The merger could generate lending and fee income opportunities, given Gokongwei Group’s diverse business operation across the country,” S&P said in a commentary release on Thursday.

“In our view, operational integration would be manageable, and could present cost synergies via elimination of branch overlaps, given both banks have a domestics focus,” the credit rater added.   

The firm does not expect the merger to have a significant impact on BPI’s credit rating, asset quality, funding and liquidity, or capital ratios.

It said BPI will benefit from having a larger customer and deposit base.

“RBC is smaller than BPI, at about 7% of its total assets. BPI’s pro forma Tier-1 capital ratio is likely to decline marginally to about 15.8% upon merger completion, compared with 15.9% as of June 30, 2022,” S&P said.

In a separate note dated Oct. 4, CreditSights said BPI’s planned merger with RBC is a positive development as both banks are prioritizing digitalization.

“Post-transaction, BPI would be able to play in the digital bank space as well, which would further aid its push into retail,” CreditSights said. “Synergies across several products and service platforms of both banks are to be expected, as with collaboration and new business opportunities across the Gokongwei conglomerate’s extensive ecosystem of businesses.”

“As for Robinsons Bank, recognition that banking is a scale game and the capital and difficulty involved in scaling up its business likely drove the conglomerate’s decision to sell its banking unit to a larger competitor. The unit’s capital ratios have fallen meaningfully in recent times following three years of rapid growth since the last round of capital infusion in 2018,” it added.

Under the deal announced last week, BPI will be the surviving entity from the planned merger, which the companies hope to complete before end-2023. Upon its closing, RBC’s shareholders will hold approximately 6% of the resulting outstanding capital stock of BPI.

Through the merger, BPI will also be taking over RBC’s 20% stake in digital lender GoTyme Bank, a joint venture between the Gokongwei Group and Tyme. GoTyme Bank was one of the six entities granted an online banking license by the Bangko Sentral ng Pilipinas.

BPI’s shares closed at P91.30 apiece on Thursday, down by 20 centavos or 0.22%. — K.B. Ta-asan