bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

urlAlias

moreOnThisArticles

sponsorType

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

George Ty reclaimed his crown as the Philippines' king of banking this week, after beating rivals to take over Solidbank.

 Mr Ty, one of the Philippines' richest men, with an estimated US$2.6 billion fortune, has been locked in a fierce battle with five fellow ethnic Chinese businessmen and the mighty Ayala clan for the past six months for the right to be known as the country's No 1 banker.

 Two years ago, it seemed inconceivable that Philippine's 55 commercial banks would heed to government calls to consolidate. Most were controlled by families and groups, averse to losing personal control.

 However, in a matter of months, the face of the Philippine banking industry has starkly changed.

 Spurred by stiffer capitalisation requirements and economic slowdown, many owners of smaller banks have been forced to sell, unleashing a frenzied flurry of merger and acquisition activity among the big players as they grapple to gain market share.

 President Joseph Estrada now predicts the country could soon be left with just four or five main domestic players, better equipped to take on mounting foreign competition as finance-sector liberalisation takes a grip.

 Mr Ty had long been considered the Philippine's biggest banker, through his flagship Metropolitan Bank and Trust (Metrobank).

 But the Ayalas stole his crown in October when they beat Mr Ty and others to acquire a 20 per cent stake in Far East Bank and Trust, which they merged with the 165-year-old Bank of Philippine Islands (PBI).

 PBI and Far East had been the country's third and seventh-ranked banks. Their $1.2 billion union gave them combined assets of 355.4 billion pesos (about HK$67.5 billion), temporarily lifting the merged bank above Metrobank.

 This deal eclipsed last May's $800 million takeover of Philippine Commercial and International Bank (PCI) by Equitable Banking, which catapulted Equitable-PCI into temporary second place in the national rankings, with assets of 244.15 billion pesos.

 Mr Ty has responded to this dual challenge by paying nearly 14 billion pesos on his own expansion campaign. He started in July, when Metrobank acquired listed Philippines Banking Corp for three billion pesos.

 In December, he bought Asian Bank for 3.5 billion pesos, beating rival bankers Alfonso Yuchengco and Henry Sy to the prize.

 Mr Ty has now consolidated his lead by paying 6.76 billion pesos for a 51 per cent stake in Solidbank from the Madrigal and Lim families.

 Mr Ty is said to have offered a 250 per cent premium over book value.

 Even so, the deal was by no means straightforward.

 Mr Ty not only faced rival bids from Mr Yuchengco's Rizal Commercial Banking Corp and Mr Sy's Banco de Oro, but had a hard job convincing Canada's Bank of Nova Scotia not to veto the sale.

 The Bank of Nova Scotia, which still owns 40 per cent of Solidbank, had first right of refusal on the Madrigal family's 38.32 per cent stake and had threatened to block the deal.

 Central bank governor Rafael Buenaventura then complicated matters by insisting Mr Ty own at least two thirds of Solidbank before forcing through a merger with Metrobank.

 To circumvent this, Mr Ty is offering Bank of Nova Scotia shares in Metrobank in exchange for its remaining 40 per cent stake.

 Even with Solidbank secured, Metrobank president Antonio Abacan insists his bank's aggressive takeover campaign will continue to maintain its market lead.

 'Apart from helping the bank affirm its No 1 standing in terms of assets and capital size, the acquisitions should benefit the bank's branch and expansion plans,' Mr Abacan said this week.

 Meanwhile, Mr Yuchengco and Mr Sy are still trying to beef up their banking empires, after at one point last year considering a three-way merger with China Banking Corp, according to the Philippine media.

 The Ayalas, meanwhile, who control listed conglomerate Ayala Corp, reportedly want to pump more capital into PCI and Far East.

 Another emerging contender for the throne of leading banker is Lucio Tan, the tobacco and airline magnate and supposed crony of the late president Ferdinand Marcos.

 Mr Tan's business fortunes have been on the rebound since his friend, former action movie star Mr Estrada, became president in 1998.

 In December, Mr Tan took a 35 per cent stake in listed Philippines National Bank (PNB). His next target is the government's 30 per cent stake, which is due to go on sale in the second quarter of this year.

 Mr Tan intends to merge PNB with his Allied Bank, creating a combined bank with 340 billion pesos in capital.

 The merger will provide Allied with a back-door listing and an avenue to expand its corporate loan portfolio, at present focused on the Filipino-Chinese market.

 John Gokongwei, who heads JG Summit group, has sold his minority stakes in PCI and Far East for 24 billion pesos after failing to gain control.

 He now intends to infuse more capital into his family's Robinson's Bank. He is also rumoured to be eyeing Philippines Bank of Communication.

 Andrew Gotianun, meanwhile, is trying to raise the competitiveness of East-West Bank.



Ty takes back banking crown with Solid victory