BDO sells 40% of ONB

MANILA, Philippines - Investment fund TPG Growth has acquired a 40-percent equity stake in One Network Bank (ONB), the rural bank subsidiary of BDO Unibank Inc. (BDO).

TPG Growth is the growth equity investment platform of TPG, a US-based private equity firm currently managing more than $50 billion of assets under management.

BDO president and chief executive officer Nestor Tan said the entry of TPG Growth would accelerate ONB’s expansion and develop new products to cover the underserved market segments.

“Through this partnership, ONB will benefit from TPG’s global experience in financial services, especially in developing markets,” Tan said.

ONB is the largest rural bank in the country with nearly a 100 branches and offices, mainly in Mindanao and Panay Islands. Last year, its total resources reached P25.6 billion.

The new phase of ONB’s growth is aligned with the Bangko Sentral ng Pilipinas’ (BSP) efforts to improve financial inclusion in the country.

BDO is the market leader in the domestic banking industry with strong brand recognition, a solid balance sheet, and the country’s largest branch and automated teller machine (ATM) network.

In July 2015, BDO bought ONB, increasing the financial muscle of the country’s largest bank into areas dominated by smaller thrift and rural banks.

The acquisition also increased BDO’s combined branch network to over a thousand, and 3,000 ATMs.

At the start of 2016, ONB targets 12 new branches or establish at least one branch for every major region, aside from the existing 100.

Early this month, BDO surrendered its thrift bank license in what many deemed as increasing the significance of ONB, in increasing deposit herding.

It also fulfills the bank’s financial inclusion drive to the unbanked and under banked segment of society.

Last year, ONB reported a net income of P398.5 million, slightly lower than the P461 million recorded in 2014.

The 14-percent decline in earnings as due mainly to increase in provisions for loan impairment, primarily from a more conservative provisioning approach.

Net interest income rose nine percent to P1.4 billion.

Total deposit portfolio stood at P21.4 billion and total loan portfolio of P20.5 billion.

Return on average equity in the same period stood at 10.8 percent, and return on average assets at 1.4 percent

Meanwhile, TPG has partnered with more than 15 financial services companies across Asia.

In 2008, TPG worked with Bank Tabungan Pensiunan Nasional (BTPN) of Indonesia to open more than 550 new branches and create a microloan business that grew the bank’s customer base to more than two million group lending program clients and 250,000 micro, small and medium enterprises (MSMEs).

Across its platform, TPG has invested in a wide variety of financial services companies throughout Asia, including Indonesian financial institution BFI; Janalakshmi, India’s largest microfinance institution; the Shenzhen Development Bank in China; and Union Bank of Colombo in Sri Lanka.

The firm is backed by the resources of TPG, which has approximately $70 billion of assets under management.

TPG Southeast Asia head Ganen Sarvananthan said TPG works with many highly impactful financial services businesses across Asia.

Thus its insights in the sector came from years of identifying and developing the full potential of strong businesses.

“Together, BDO and ONB have built an impressive foundation. We look forward to bringing all that we’ve learned into a collaborative partnership and expanding the impact they’ve already created,” Sarvananthan said in a separate statement.