MANILABANK TO MERGE WITH CHINA BANK

China Banking Corporation, the country’s first privately-owned universal bank, is acquiring the majority shares owned by the Puyat block in Manilabank. The final purchase price will be arrived at after a 30-day due diligence to be conducted by China Bank immediately after the MOA signing. In a joint press statement, the Puyat family – founders and majority owners of Manilabank – and top officials of China Bank announced the signing on June 21 of a Memorandum of Agreement, which calls for the purchase of 87.51% of Manilabank’s subscribed shares. The deal is subject to approval by the Monetary Board and the Securities and Exchange Commission.
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The resulting merger will boost China Bank’s network of 155 branches by 75 branches from Manilabank, on top of the ongoing 3-year branch expansion program of China Bank. Of the 75 Manilabank branch licenses – of which 27 are operating  -- 41 are located in Metro Manila, while 34 are in provincial areas. Manilabank reopened as a savings bank in June 1999. As of December 2006, its total assets stood at P10.2 billion, loans at P4.4 billion, deposits at P5.2 billion.
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At the signing ceremony, Manilabank Chairman Luis Puyat remarked on behalf of the selling shareholders, “The rapidly changing landscape of the Philippine banking industry has made it tougher for smaller banks to compete. It was a difficult decision for the family to let go a business we have painstakingly built over the years. In looking for a partner, we were attracted by China Bank’s industry-best capital strength, financial stability, loyal customers, and sustained profitability. We are gratified that Manilabank will become a crucial part of China Bank’s plans to become a strong major player in the industry.”
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China Bank Chairman Gilbert U. Dee, on the other hand, said, “We are extremely grateful to the Puyat family for entrusting the future of their banking business, which they have built and nurtured over several generations, to China Bank.” China Bank Vice Chair and Excom Chair Hans T. Sy said, “We consider this deal a strong recognition of the inherent strengths of China Bank and the strong future that this combination of resources would mean for our combined client base.”
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China Bank President and CEO Peter S. Dee, who signed that MOA for China Bank, also said, “Our 3-year business plan calls for an aggressive expansion of our distribution network, together with substantial growth in our assets and loan portfolio. This acquisition will boost our branch network substantially to over 250 branches, including the expansion program we already started even before this deal. With a bigger footprint and network through which we can sell and distribute our full range of products and services, we are now in a better position to compete more effectively with the bigger competitors in the banking industry.”
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China Bank has established a strong financial track record, especially in the last 6 years. China Bank’s 2006 net income performance of P3.54 billion represented a return on stockholders equity of 15.93% and a return on assets of 2.47%.  The bank’s capital adequacy ratio of 28.35% adjusted for credit risk (23.68% adjusted for both credit and market risks) continues to be among the highest in the industry, placing it in a unique position of being able to pursue its 3-year plan of accelerated loans growth and branch network expansion, absorb the requirements of Basel 2, while providing satisfactory returns to shareholders thru substantial cash and stock dividends.