BPI Chairman Jaime Augusto Zobel de Ayala, Vice Chairman Cezar P. Consing, and President/Chief Executive Officer (CEO) Jose Teodoro Limcaoco led BPI board members, board advisers and BPI’s senior management during the special meeting that was held in full virtual format.
Robinsons Retail Holdings Vice Chairman James Go, Robinsons Retail Inc. President/CEO Robina Gokongwei Pe and Robinsons Bank President/CEO Elfren Antonio Sarte represented Robinsons Bank.
Also in attendance during the meeting was BPI’s external auditor Isla Lipana, as well as over 79 percent of shareholders who attended either via proxy or via live webcast.
Rationale for the merger
Limcaoco explained the reasons for the merger, as follows:
“The proposed merger of BPI and RBC (with BPI as the surviving corporation of the merger) will unlock various synergies across several products and service platforms and will also expand the customer base of both banks.
“Over the past five years, RBC’s consumer loans posted an impressive 30 percent CAGR growth, bringing RBC’s loan mix to a 42 percent allocation for consumer loans which, compared to BPI’s 20 percent, is significantly higher. This relatively high mix of consumer loans has been a key driver for net income growth and is aligned with BPI’s aspiration of increasing its consumer loan book to 33 percent of BPI’s loan book.
“Apart from growing BPI’s client and deposit base and expanding synergies, the proposed merger will increase shareholder value by providing BPI opportunities to collaborate across the Gokongwei group’s ecosystem, which includes leading businesses in food manufacturing, air transportation, real estate and property development, and multi-format retail companies.
“In addition, the merger will also expand BPI’s access to the network of the Gokongwei group, especially to the Filipino Chinese market segment, which has been the significant advantage of BPI’s closest competitors.”
Responding to an emailed query, Limcaoco explained the projected financial effects and operational impacts of BPI’s merger with RBC, as follows:
“Robinson’s Bank is expected to expand BPI’s key balance sheet metrics by between 6.5 and 7 percent. Over the past years, RBC has really been steadily growing its deposit and loan books at a pace much faster than industry. Consequently, we believe that this merger will immediately improve BPI’s industry ranking in deposits to second from third.
“RBC is also strong in its savings account or CASA, with a CASA ratio of 83 percent, higher than BPI’s by 4 percentage points.
“Robinson’s asset quality, while not as strong as BPI’s, is very manageable and would not have a significant negative impact on BPI’s books. BPI’s very strong NPL coverage, gives BPI more than adequate headroom, with the combined entity of BPI and RBC still having a coverage ratio of above 160 percent.
“RBC has a strong capital position which is comfortably above regulatory thresholds.
“Finally, RBC’s clients also have a very strong digital adoption, with over 35 percent of their retail clients enrolled in RBC’s digital app.
“RBC can potentially add about 7 percent to BPI’s revenues and 5 to 6 percent to BPI’s net income. RBC posted a 35 percent CAGR over the past 5 years, with net income exceeding industry averages.
“Over the same period, ROE was also consistently above industry average. Their net interest margin is high given the sizable share of consumer loans in their portfolio.
“Overall, it will be very positive.”
Transaction time for the merger
The closing of the transaction is conditioned on securing the approvals from regulatory agencies, the Bangko Sentral ng Pilipinas, the Securities and Exchange Commission, the BIR, including the Philippine Competition Commission, which BPI hopes to secure before the end of the year.
Given that, the expected effectivity of the merger is January 1, 2024. From now, until the merger becomes effective, BPI and RBC will continue their respective operations as normal.
Earlier, the stockholders voted to approve a proposed amendment to Article 7 of BPI’s Articles of Incorporation. The proposed amendment seeks 1) to increase BPI’s authorized capital stock by 4 billion pesos to cover the shortfall in unissued common shares resulting from the proposed merger with Robinson’s Bank, as well as the remaining allocation for employee stock incentive plans; 2) the combination of 1.5 percent allocation of the authorized common shares for the executive stock option plan and the 1.5 percent allocation of the authorized common shares for the stock purchase plan into a single 3 percent allocation for all employees stock incentive plans, and 3) the denial of pre-emptive rights over 406 million+ treasury shares to enable disposition thereof by BPI in accordance with Republic Act 8791 (General Banking Law of 2000).