Banco de Oro-Equitable PCI Bank Merger - Precedents

Precedents

This merger is only one part of the "second wave" of mergers and acquisitions in the Philippine banking industry, the first one being in the 1990s. Notable acquisitions in the second wave include Citibank's acquisition of Insular Savings Bank and BPI's acquisition of Prudential Bank, as well as the acquisition of International Exchange Bank by Union Bank of the Philippines, and more recently, the acquisition of Philippine Bank of Communications from Philtrust Bank.

The merger is part of a campaign on the part of the Bangko Sentral ng Pilipinas, in a complete reverse of stance from the 1990s. During the term of Bangko Sentral governor Gabriel Singson, the Bangko Sentral urged the creation of more banks, encouraging competition. However, the Asian financial crisis eventually forced the Bangko Sentral under Rafael Buenaventura to urge for the creation of more financially stable banks, starting the first wave of mergers and acquisitions. The current governor, Amando Tetangco, has kept the stance of Buenaventura.

It is likely that an ongoing consolidation is taking place. Other target banks could include smaller players such as United Coconut Planters Bank, Union Bank of the Philippines and Allied Bank. Some banks are considering the use of the strategy to maintain their places: this is most apparent with Metrobank, which is trying to fend off competition to stay as the Philippines' biggest bank.