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Business

S&P: BPI-Robinsons Bank merger adds scale, promotes collaboration

Lawrence Agcaoili - The Philippine Star

MANILA, Philippines — The proposed merger between Bank of the Philippine Islands (BPI) and Robinsons Bank Corp. (RBC) will pave the way for collaboration between two of the country’s largest conglomerates, according S&P Global Ratings.

In a commentary, the debt watcher said the planned consolidation would strengthen ties between Ayala Corp., which controls BPI, and the Gokongwei Group, which owns RBC.

“The merger could generate lending and fee income opportunities, given Gokongwei Group’s diverse business operation across the country. In our view, operational integration would be manageable, and could present cost synergies via elimination of branch overlaps, given both banks have a domestic focus,” S&P said.

It added that the merger with RBC would increase the market share of BPI in terms of assets by about one percent.

Even prior to the consolidation, latest data from the Bangko Sentral ng Pilipinas (BSP) showed that BPI has already emerged as the country’s second largest private bank in terms of assets, with P2.41 trillion as of end June, second to Sy-led BDO Unibank with P3.66 trillion.

As of end June, RBC ranked 16th with total assets of P175.9 billion, including net loans and receivables of P102.4 billion, and total liabilities of P156 billion, including deposits of P139 billion.

“S&P Global Ratings does not expect the merger to have a meaningful impact on the combined entity’s asset quality, funding and liquidity, or capital ratios,” the debt watcher said.

However, the credit rating agency acknowledged that the merger should benefit the combined entity’s market position via an enlarged customer and deposit base.

According to S&P, RBC is smaller than BPI at about seven percent of its total assets.

“BPI’s pro forma Tier-1 capital ratio is likely to decline marginally to about 15.8 percent upon merger completion, compared with 15.9 percent as of June 30, 2022. Our issuer credit rating on BPI (BBB+/Stable/A-2) is unaffected,” it added.

The shareholders of RBC, JG Summit Capital Services Corp. and Robinsons Retail Holdings Inc., would collectively hold approximately six percent of the resulting capital stock of BPI after the completion of the merger before the end of 2023.    

BPI

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