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2 Philippine banks merge, to target Japanese clients.

MANILA, Oct. 21 Kyodo Two leading Philippine banks, Bank of the Philippine Islands (BPI) and Far East Bank and Trust Co. (FEBTC), announced a merger Thursday to create the Philippines' biggest bank targeting Japanese corporate clients in the country and to set up one of Southeast Asia's top 10 banks in terms of capital.

BPI and FEBTC said in a joint statement that the new bank's joint and expanded operations for Japanese clientele will continue to be supported by a team nominated by Japan's Sakura Bank, FEBTC's single biggest shareholder with a 25% stake. Sakura will become a "strategic shareholder" of the new bank after the merger.

"The combined bank would be the dominant Philippine bank serving Japanese corporate clients," the statement noted.

It added, "BPI and FEBTC jointly announced a merger of equals in a stock-for-stock transaction that will create the largest bank in the Philippines by all measurements -- assets, loans, deposits and capital." The merger, with BPI as the surviving entity and the corporate name, will have 352 billion pesos (8.8 billion dollars) in assets, 50 billion pesos in capital funds and 148 billion pesos in funds managed, based on BPI's closing price Wednesday at the Philippine Stock Exchange of 118 pesos per share.

The merged entity has a combined market capitalization of 150 billion pesos and will be among the top 10 banks in Southeast Asia, the statement said.

"Under the terms of a definitive merger agreement approved by the boards of both companies...each share of stock of FEBTC will be converted into 0.6992 share of common stock of BPI," the statement said.

Based on the BPI's closing price, the exchange ratio represents a 29.6% premium to the average price of FEBTC over the last month.

"On the basis of the exchange ratio, BPI shareholders will own two-thirds of the combined bank, and FEBTC shareholders, one-third," it said.

"Upon completion of the merger, the company's name will be BPI, the surviving entity, with the trust business operated under a separate subsidiary named Far East Trust Co.," the statement said.

Before the merger, BPI was listed as the country's third largest bank while FEBTC was the fifth largest.
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Publication:Asian Economic News
Date:Oct 25, 1999
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