and Equitable PCI Bank
Transcription
and Equitable PCI Bank
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 12 Q&A 13 14 15 16 17