BDO

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Merger of
Banco de Oro &
Equitable PCI Bank
November 6, 2006
Disclaimer
This presentation and the presentation materials distributed herewith
include forward-looking statements. All statements, other than
statements of historical facts, that address activities, events or
developments that Banco de Oro (“BDO”) and Equitable PCI Bank
(“EPCI”) expect or anticipate will or may occur in the future
(including but not limited to projections, targets, estimates and
business plans) are forward-looking statements. BDO’s and EPCI’s
actual results or developments may differ materially from those
indicated by these forward-looking statements as a result of various
factors and uncertainties, including but not limited to price
fluctuations, actual demand, exchange rate fluctuations, market
shares, competition, changes in legal, financial and regulatory
frameworks, international economic and financial market conditions,
political risks, cost estimates and other risks and factors beyond our
control. In addition, BDO and EPCI make the forward-looking
statements referred to herein as of today and undertake no obligation
to update these statements.
2
Transaction Summary
♦ Description
Merger of Banco de Oro (“ BDO” ) and
Equitable PCI Bank (“ EPCI” )
♦ Surviving entity
BDO
♦ Name of merged entity
Banco de Oro – EPCI, Inc.
♦ Structure
BDO to issue new shares in exchange
for 100% EPCI shares
♦ Exchange Ratio
1.80 BDO shares per EPCI share
♦ Required Approvals
- Board approvals already received
- Customary shareholder and regulatory
approvals required
♦ Anticipated Closing
1st Quarter 2007
3
Transaction Rationale
Substantial
revenue and
cost synergy
potential
Improved
balance sheet
management
Dominant
pro forma
market position
Broader
customer base
and
relationships
4
Enhanced
distribution
network
Market leading
position in
core business
lines
Dominant Pro Forma Market Position
Among the top 3 banks in the Philippines by total assets, loans,
and deposits
Total assets
Metro
630
BDO+EPCI
613
BPI
Metro
#2
526
EPCI
Landbank
BDO
200
#3
43 5
BPI
42 5
La nd ba nk
318
EPCI
126
EPCI
146
0
210
BDO
84
BDO
RCBC
78
PNB
Chinabank
62
PNB
55
Union
400
PHP bn
600
800
100
200
PHP bn
Note: Figures based on Statement of Conditions as of Sept 29, 2006
5
300
#2
24 7
23 1
20 4
17 8
RCBC
35
0
48 0
BDO +EPCI
129
148
Chinabank
219
Landbank
209
Union
BPI
M e tro
321
238
RCBC
276
BDO+EPCI
293
PNB
Total deposits
Net loans
15 0
C hina ba nk
11 3
U nion
10 2
0
20 0
40 0
PHP bn
60 0
Enhanced Distribution Network
Branches
#3
294
251
191
141
Union
Chinabank
342
BDO
357
RCBC
EPCI
BDO+EPCI
447
Metro
BDO
♦ Strong position in key urban areas
and commercial centers / malls
♦ Highest deposits per branch in the
system
698
Landbank
707
PNB
896
BPI
1,000
800
600
400
200
0
Complementary branch network
EPCI
♦ Strong presence in provincial areas
♦ Good penetration of traditional
Filipino-Chinese markets
Combined footprint
Region
Metro Manila
Luzon
Visayas
Mindanao
Hong Kong
Total branches
Total ATMs
1
BDO
171
47
22
11
0
251
513
EPCI
216
129
56
45
1
447
658
Combined1
387
176
78
56
1
698
1,171
♦ Strong nationwide platform for
selling traditional and non
traditional products
♦ Overlapping branches can be
consolidated and redeployed to new
markets
Before consolidation
6
Market Leading Position in Core Business Lines
Consumer
Lending
♣Leading player in card issuing and
merchant acquiring (est. 700,000 cards)
♣Strong distribution capability with a total of
698 branches and 1,171 ATMs
Middle Market
♣Dominant player in middle market lending,
particularly Filipino-Chinese businesses
♣Improved coverage and complementary
marketing strengths
Corporate
Banking
♣Wide client coverage, strong origination and
structuring capabilities
♣Strong debt/equity distribution capabilities
7
Market Leading Position in Core Business Lines
Branch Banking
Trust Banking
♣Strong platform for fund generation and
cross-selling
♣Consolidation allows redeployment of
resources to new markets
♣Leading asset management business with
combined AUM of PHP166 bn (3Q’06)
♣Complementary market coverage with
minimal duplication
Remittances
♣Dominant player in OFW remittances with
25-30% market share
♣Strength in both origination and distribution
Leasing and
Finance
♣Largest leasing and finance business
8
Substantial Revenue Enhancement Potential
Expected revenue enhancements
♦Scale creates potential for:
– Improved product / market position through enhanced
distribution network
– Greater investment in new products / product development
– Stronger brand identity
♦Greater opportunities to increase fee-based income and
cross-selling potential through the combined bank’s
expanded product offering and customer base as well as its
affiliation with the SM Group network
9
Substantial Cost Synergy Opportunities
Expected cost efficiencies
♦Information technology: Economies of scale through utilization
of common system
♦Branches and ATMs: Consolidation and integration of
distribution network
♦Head office/back office support: Optimization of head office
and other support functions
♦Marketing and advertising: Shared expenditure
♦Product development and roll-out: Greater efficiency and
improved distribution
Cost efficiencies estimated to be 10-15% of combined
expense base
10
Improved Balance Sheet Management
♦Risk management
– Greater diversification of risk
– Enhanced risk management systems / procedures
– Better expertise in maximizing recoveries
♦Funding cost
– Improved funding cost from increased scale and reduced
risk profile
– Increased low cost deposit gathering capabilities through
larger distribution network
11
Shareholder Value Creation
Pro forma impact
♦ Earnings accretion expected by the end of year 2
– Target of 20%+ pro forma ROE in the medium term
♦ Strong pro forma capital position
– Pro forma consolidated CAR of 17% as of September 30, 20061
– Robust estimated CAR levels even post Basel II implementation
♦ Stock re-rating potential from larger scale
– BDO (P/TBV: 2.1x) and EPCI (P/TBV: 1.8x) trade at a significant
discount to larger peer
– Approx. US$2 bn market capitalization
– Increased liquidity and coverage from research analysts and
investors
1. Adjusted for sale of EPCI shares held by EBCII on October 3, 2006
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Q&A
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