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PHL banks continue to face credit risks — S&P

By Luz Wendy T. Noble, Reporter

EMERGING MARKETS such as the Philippines will continue to face credit risks this year, as the central bank is likely to lift regulatory relief measures and the loan payment moratorium expires,  S&P Global Ratings said.

At the same time, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi G. Fonacier said they are still looking into asset quality developments to gauge when to lift relief measures implemented at the height of the lockdown last year.

“NPLs (nonperforming loans) and restructured loans will continue to increase over the next few quarters as the true impact of the COVID-19 (coronavirus disease 2019) shock on the banks’ borrowers unfolds,” Nikita Anand, an analyst at S&P Global Ratings, said in an e-mail.

“We believe NPL ratio could further climb to about 6%-6.5% by the end of 2021,” she added. The global debt watcher projects the ratio may have risen by 4-5% in 2020 from the 2019 level.

Ms. Anand warned a “sharp rise” in NPL may occur after the second debt moratorium as provided for under Republic Act 11494 or the Bayanihan to Recover as One Act expired on Dec. 31, 2020. 

The Philippine banking industry’s NPL ratio reached 3.81% as of end-November, rising from the 3.72% in October as well as the 2.19% a year earlier, based on BSP data. Bad loans surged 73.6% to P404.687 billion in November from P233.064 billion a year ago.

The restructured loans ratio also increased to 1.31% of total loans as of end-November from 0.38% a year earlier. These loans soared 241% to P139.614 billion from P40.857 billion a year ago.

S&P in a note warned that bad loans will further pick up once regulatory relief measures employed by central banks in developing markets are lifted.

Ms. Fonacier said they “are still monitoring developments on asset quality.”

“Hence, we cannot yet determine the timeline on the lifting of the regulatory relief at this point,” she said in a Viber message.

BSP Governor Benjamin E. Diokno said they will carefully assess the timing of when they will unwind relief measures to ensure it will not cause risks or instability to the financial system.

The central bank said the bad loan ratio may have reached 4.6% as of end-2020. It peaked at 17.6% in 2002 in the aftermath of the Asian financial crisis.

Meanwhile, Ms. Anand said the rollout of COVID-19 vaccines will be used in assessing economic and credit risks of sovereigns.

“Widespread immunization, which certain countries might achieve by midyear, will help pave the way for a return to more normal levels of social and economic activity,” she said. “The improvement in asset quality will depend on economic recovery and stabilization of credit conditions.”

The BSP’s Ms. Fonacier said the country’s vaccination program is a welcome development, noting its “positive impact on business confidence.”

The Banking Sector Outlook Survey of the BSP released earlier this month showed majority of respondent banks expect the NPL ratio to go beyond 3% until 2022, while nearly half of banks see restructured loans to comprise 3-5% of their credit portfolio.

This uncertainty has led to a decline in bank lending growth, which stood at 0.3% in November, the slowest since the 1.9% in September 2006.

COVID-19 pandemic could be source of global crises for years — WEF

THE CORONAVIRUS has exposed the “catastrophic effects” of ignoring long-term risks such as pandemics, and the economic and political consequences could cause more crises for years to come, according to the World Economic Forum (WEF).

The WEF’s annual survey of global risks lists infectious disease and livelihood crises as the top “clear and present dangers” over the next two years. Knock-on effects such as asset bubbles and price instability lead concerns over 3-5 years.

The WEF said most countries struggled with crisis management during the pandemic, despite some remarkable examples of determination and cooperation. That highlights how leaders need to prepare better for whatever the next major shock turns out to be.

“The immediate human and economic cost of COVID-19 is severe,” the WEF said in the report. “The ramifications — in the form of social unrest, political fragmentation and geopolitical tensions — will shape the effectiveness of our responses to the other key threats of the next decade.”

While the impact of the pandemic is dominant at the moment, other events will likely come to the fore, according to the survey. As in previous years, extreme weather is seen as the most-likely risk, just ahead of a failure in climate action. Infectious diseases make the top five for the first time in at least a decade.

Digital inequality and the concentration of digital power are also seen as major concerns, with WEF Managing Director Saadia Zahidi warning of a global “bifurcation in terms of growth and development.”

“There are parts of the world that have digital access and inclusivity and that is where some parts of the workforce — not all — are able to continue, are able to adapt,” she told Bloomberg Television on Tuesday. “But then there’s this other part of the world where we don’t even have basic internet access, basic electricity access, basic water access and that is where recovery and a return to growth will look very different.”

The WEF’s recommendations for boosting resilience include combating misinformation, especially as coronavirus vaccines are rolled out. It cited one example of false information — that ingesting highly concentrated alcohol kills COVID-19 — which caused more than 700 deaths and nearly 6,000 hospitalizations in Iran.

More broadly, it said post-truth politics are “amplifying hate speech, heightening the risk of conflict, violence and human rights violations, and threatening long-term prospects for advancing democracy.”

The forum also recommended “holistic” risk analysis, investing in “risk champions” to encourage international cooperation, and exploring new forms of risk management such as public-private partnerships.

“If lessons from this crisis only inform decision makers how to better prepare for the next pandemic — rather than enhancing risk processes capabilities and culture — the world will be again planning for the last crisis rather than anticipating the next,” the WEF said. — Bloomberg

Makati Shangri-La Hotel to temporarily close

MAKATI SHANGRI-LA Hotel will be temporarily closing down operations starting next month as it yields to financial pressures caused by the lockdown.

The Shangri-La Group said in a statement on Wednesday that the company will be reorganizing its Philippine workforce and operations. It did not announce the length of the closure.

The luxury hotel operating in Makati City for almost three decades will be letting go of an unspecified number of employees, and will be offering compensation, healthcare coverage, and grocery support to former employees until the end of the year.

Shangri-La said that the closure decision was made after low business levels and a prolonged recovery timeline.

Hotels for much of the stricter lockdown declared in March last year to manage the public health crisis were not allowed to operate at full capacity.

Permission for full workforce capacity at general and modified general quarantine areas was given by the end of October.

Makati Shangri-La was one of the hotels given authority to operate for staycations, or what the Tourism department defines as leisure-based hotel stays close to the visitors’ residence.

The company during the lockdown cut costs by reducing salaries at the management level, imposed shorter work weeks, froze hiring, and cut “non-essential” spending.

“We continue to vigilantly monitor local and global developments and look forward to reopening Makati Shangri-La, Manila at a later date when business conditions have improved.”

The Tourism sector was hit hard by measures to contain the coronavirus disease 2019 (COVID-19) pandemic, with revenues last year dropping 83% to P81.4 billion after a significant decline in foreign visitors. — Jenina P. Ibañez

DoE clears six firms to serve customers who opt for ‘green’ energy

By Angelica Y. Yang

SIX suppliers of renewable energy, including entities led by Aboitiz and Ayala businesses, have been granted permits to participate in the country’s “green energy option” program, giving them the lead in offering electricity to consumers who prefer cleaner power sources.

On Wednesday, the Department of Energy (DoE) posted on its website the names of the six eligible companies, namely: Bacman Geothermal, Inc.; First Gen Energy Solutions, Inc.; SN Aboitiz Power-Magat, Inc.; SN Aboitiz Power-Res, Inc.; AC Energy Philippines, Inc.; and the Sparc-Solar Powered Agri-Rural Communities Corp.

Mylene C. Capongcol, director of the DoE’s Renewable Energy Management Bureau (REMB), said the six companies are the first ones to file operating permits for the green energy option program, or GEOP.

“Their applications are evaluated based on the guidelines issued by the DoE,” she said in a quoted in a statement provided by the department’s public affairs office via Viber on Wednesday.

The program, which was launched in 2018, is a voluntary policy mechanism that allows consumers with at least 100 kilowatts (kW) of usage to source their supply from a retail energy supplier (RES), based on a DoE circular issued about three years ago.

Before joining the GEOP, suppliers must secure an operating permit from the DoE’s REMB. A GEOP operating permit authorizes a firm to supply electricity to a qualified end-user.

Asked whether the six firms were the only ones allowed to supply green energy, Ms. Capongcol said: “No, we are not limiting to the six RE suppliers. Our issuance of GEOP Operating Permits follows prescribed criteria as per our issued policy.”

In April last year, the DoE issued the guidelines for suppliers that wanted to participate in the program.

In September, Ms. Capongcol said that the department would be awarding its first operating permit to a retail electricity supplier.

Based on a department circular titled “Guidelines governing the issuance of operating permits to renewable energy suppliers under the green energy option program,” suppliers under the GEOP are required to:

• Comply with the terms and conditions of the operating permit, circular provisions and GEOP rules;

• Submit annual reports to the REMB on or before Jan. 30;

• Ensure that the total power from its facilities are greater or equal to the total kilowatt hour (kWh) sold to its consumers;

• Register in the Wholesale Electricity Spot Market and with the Central Registration Body before supplying power to end-users; and

• Register with the RE Registrar.

The GEOP allows more end-users to access clean power from qualified RE firms.

Former MPIC, Megawide executives join Converge

NEWLY listed fiber internet provider Converge ICT Solutions, Inc. announced on Wednesday the appointment of its two new executives, who are expected to raise the company’s “organizational standards of governance, stakeholder relations, and risk management.”

In a disclosure to the stock exchange, the company named Owen Kieffer Ocampo as investor relations director and Anthony Vergel Velasco as internal audit director.

Mr. Ocampo, who previously served as the investor relations manager of Metro Pacific Investments Corp. (MPIC), is expected to “champion a best-in-class investor relations function” within the company, Converge said.

“He brings in over eight years’ experience, having started his career in 2012 with JPMorgan Chase. In 2013, he joined the Deal Advisory Group of KPMG in the Philippines (R. G. Manabat & Co.) as a supervisor and quickly progressed to managerial roles within his four-year stint,” it added.

Meanwhile, Mr. Velasco previously served as the Megawide group’s chief audit executive.

He also worked as head of the IT audit unit at Security Bank Savings and chief audit executive at 2Go Group, Inc.

Mr. Velasco brings over 21 years of internal audit experience, covering financial, compliance, information system, and operational risk, Converge noted.

The company added that it expects Mr. Velasco to “ensure the effectiveness of the governance and control processes for accomplishing internal audit’s mandate as defined in the internal audit charter.”

Converge ICT Founder and Chief Executive Officer Dennis Anthony H. Uy said Messrs. Ocampo and Velasco will be spearheading initiatives “that raise organizational standards of governance, stakeholder relations, and risk management.”

MPIC is one of three Philippine subsidiaries of Hong Kong’s First Pacific Co. Ltd., the others being PLDT, Inc. and Philex Mining Corp. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., maintains an interest in BusinessWorld through the Philippine Star Group. — Arjay L. Balinbin

ERC taps third-party to audit electric cooperatives

THE Energy Regulatory Commission (ERC) has enlisted the services of consulting firm Reyes Tacondong & Co. to audit the electric cooperatives (ECs) on the use of funds for their capital expenditures, in a bid to complement the commission’s evaluation efforts, the regulator said on Wednesday.

In a press release, the ERC said that it has decided to get a third party to audit the ECs to see if they are using their reinvestment fund for sustainable capital expenditures (RFSC) in line with the commission’s rules.

“The bidding process has been completed and the contract has been awarded to the winning bidder,” ERC Chairperson and CEO Agnes VST Devanadera said of Reyes Tacondong & Co. The commission said that it awarded the contract to the chosen consultant because it submitted the highest rated and responsive bid.

EC’s are authorized to collect from member-consumers the funds, which would go to their reinvestment fund. The fund is meant for amortization or debt service of the ECs in the expansion, rehabilitation, or upgrading of their power systems.

“We are duty-bound to promote and protect the consumers’ interest and the impending audit of the ECs’ Reinvestment Fund for Sustainable Capital Expenditures or RFSC will establish whether the ECs’ collection and disbursements thereof indeed benefited the consumers,” Ms. Devanadera said.

Data from the National Electrification Administration (NEA) showed that 109 ECs were able to sustain their positive financial operations before raising reinvestment funds during the fourth quarter of 2019. Also, 109 ECs were able to sustain their positive net worth.

“These two parameters indicate that most of the ECs are financially healthy,” the NEA said in its compliance report on the performance of ECs in the fourth quarter.

On Jan. 8, the ERC announced that it had tapped into a consultant to verify if utility giant Manila Electric Co. returned its reported refunds to its customers. In a previous press release, the commission said that it had awarded the contract to Roxas Cruz Tagle and Co. — Angelica Y. Yang

TDF yields ease as BSP says it will continue lending to gov’t

YIELDS ON term deposits auctioned off by the Bangko Sentral ng Pilipinas (BSP) on Wednesday continued to fetch lower yields as the central bank signaled it could lend more funds for the government’s pandemic response.

Total bids for the central bank’s term deposit facility (TDF) reached P756.711 billion yesterday, higher than the P570-billion offering as well as the P726.615 billion in demand seen last week.

Broken down, the seven-day term deposits fetched bids worth P291.491 billion, going beyond the P210 billion auctioned off by the BSP but lower than the P305.273 billion in tenders logged the previous week.

Accepted rates for the tenor were seen from 1.6% to 1.65%, a narrower range compared with the 1.6% to 1.67% seen last week. With this, the seven-day paper’s average rate dropped 1.45 basis points (bps) to 1.6325% from the 1.647% logged previously.

Meanwhile, demand for the two-week deposits reached P465.22 billion, above the P360 billion on the auction block as well as the P421.342 billion in bids recorded last week.

Lenders asked for yields ranging from 1.6% to 1.6743%, a smaller band compared with the previous week’s 1.6% to 1.7%. This caused the average rate of the 14-day papers to settle at 1.6534%, down by 1.39 bps from the 1.6673% seen on Jan. 13.

The BSP did not offer the 28-day deposits for the 14th straight week. This follows the start of its weekly auctions of short-term bills with the same tenor.

The term deposits and BSP securities are tools used by the central bank to mop up excess liquidity in the financial system and to better guide market interest rates.

Recent signals from the BSP that it will continue to lend to the government if the need arises pulled down TDF yields, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.

“[A] possible increase in BSP’s direct lending to the National Government would reduce the need for the government to borrow from the local market, thereby reducing crowding out effects or reducing competition with other borrowers partly caused the latest easing of the TDF yields,” Mr. Ricafort said in a text message.

BSP Governor Benjamin E. Diokno last week said the National Government can still access direct advances from the central bank. Republic Act No. 11494 of the Bayanihan to Recover as One Act allows the BSP to provide up to 30% or about P820 billion in direct provisions to the National Government to help it finance its response to the coronavirus pandemic

The BSP in December approved a P540-billion zero-interest direct advance to the National Government. This followed a P300-billion reverse repurchase agreement with the Bureau of the Treasury in March and a P540-billion advance in October, both of which have already been paid.

Mr. Diokno said direct advances from the BSP will help the government save on interest payments.

He also said the financing will “not be a permanent feature of fiscal and monetary relationship” and will stop when the economy recovers. — Luz Wendy T. Noble

Growth rate of business name registrations hit 10-year high in 2020

BUSINESS name registrations with the government in 2020 grew by its largest margin in a decade, the Trade department said.

Newly registered businesses reached about 900,000 by mid-December, or 41% higher than the previous year.

“‘Yun ang highest growth rate of 41% since 2010,” Trade Secretary Ramon M. Lopez said in the DiskarTech IPON Galing online event on Wednesday.

Online retailer registrations, he said, grew to 88,000 by the end of 2020 from around 1,700 between January to March.

Businesses have turned to online selling after the government last year imposed the lockdown that lowered foot traffic in malls and other commercial centers.

The Department of Trade and Industry previously said that 38% of around 2,000 surveyed micro, small, and medium-sized enterprises were found to have shut their doors during the stricter lockdown in April and May.

E-commerce company Lazada Philippines said that its daily sales grew by 2.5 times last year, noting that the number of merchants doubled.

The Trade department in 2019 moved its business name registration processes online. — Jenina P. Ibañez

Central bank looking to tighten its watch on lenders’ ownership

THE BANGKO SENTRAL ng Pilipinas (BSP) is looking to bring down the threshold for the transfer of shares of stocks that needs its approval to ensure “proper” and “fit” ownership of BSP-supervised financial institutions (BSFIs).

A Jan. 14 version of the draft circular posted on the central bank’s website also moved the authority to approve these transactions to the BSP from the Monetary Board.

Based on the proposal, the BSP is looking to define control of an enterprise when at least 10% of voting shares of a bank or a financial company is indirect or directly owned or held by an entity. This proposed threshold will be the basis for the transfer of shares of stocks that will need prior approval from the BSP once the circular is approved.

The threshold is currently set at 20% under the BSP’s Manuals of Regulations for Banks and Non-bank Financial Institutions.

“The BSP deems that even at 10%, it is considered significant such that it needs BSP approval,” BSP Deputy Governor Chuchi G. Fonacier said in a text message.

“The Bangko Sentral recognizes the importance of public’s trust in promoting the safety and soundness of individual financial institutions and the financial system as a whole,” the policy statement of the draft circular read.

“It is in this light that it is issuing regulations on the transfer of shares of stocks in BSFIs and the qualifications of holders of said shares to ensure that only individuals and corporations as well as their ultimate beneficial owner/s who are fit and proper shall be allowed to own a substantial or controlling interest in a bank,” it added.

The draft circular likewise says prior approval from the BSP is needed for these transactions. Under current regulations, these are approved by the Monetary Board.

Ms. Fonacier said if the proposal is approved, the BSP Financial Supervision Sector will be in charge of the approval of the transfer of shares of stocks.

Stakeholders are given until Jan. 22 to give their feedback on the draft circular.

An analyst said the proposal would help protect both the financial system and the public.

“This move would further promote further financial stability as well as greater protection of the depositing public, to ensure stronger banking system and also fulfill the mandate of sustainable economic growth over the long-term,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.

The central bank has said it will monitor financial stability risks in the banking system amid the current crisis by managing potential systemic risks or events even at the company level. — L.W.T. Noble

First Philippine Holdings amends tender offer for Lopez Holdings shares

FIRST PHILIPPINE Holdings Corp. (FPH) has modified its tender offer to buy common shares of Lopez Holdings Corp. by lowering the number of stocks that it plans to acquire, the company said in a regulatory filing on Wednesday.

FPH said its revised tender offer will cover up to a maximum of 1.57 billion common shares, equivalent to 34.5% of the total issued and outstanding common shares.

The figures represent a revision of its previous plan to acquire a minimum of 20% or 908.46 million common shares and up to a maximum of 45.56% or 2.07 billion common shares of the total issued and outstanding common shares of Lopez Holdings, the parent firm of FPH.

The shares will be acquired from Lopez Holdings shareholders at P3.85 per common share. However, the intention does not include the shares owned by Lopez, Inc., which agreed not to tender its common shares.

“The reduction will remove the risk of [Lopez Holdings] falling below the required minimum public ownership and dispense with the need to pursue its petition for a voluntary delisting,” the disclosure said.

FPH President and Chief Operating Officer Francis Giles B. Puno said the company wanted to remove the pressure that a number of Lopez Holdings shareholders may have experienced from its plan to delist.

He added that the firm wanted the market to decide whether investors want to avail of the tender offer shares.

“It bears stressing that the tender offer price is at a significant premium to the market price right before the tender was announced and is even at the higher range of the valuation provided by the independent financial adviser, KPMG, as accredited by the exchange,” Mr. Puno was quoted as saying.

FPH said its tender offer price of P3.85 is a 25% premium over Lopez Holdings’ closing share price on Nov. 27 last year, at P3.08, and is 41%, 43%, and 36% premium over its three-month, six-month, and 12-month volume weighted average price at P2.74, P2.69, and P2.82, respectively.

The company added that its tender offer price is also a 22% premium over Lopez Holdings’ six-month closing high of P3.15 as of Nov. 27, 2020.

“The tender offer period is intended to still commence on Jan. 22, 2021 and end on Feb. 19 2021, subject to extension as circumstances may warrant,” the disclosure said.

In December last year, Lopez Holdings announced that it had filed for the voluntary delisting of its 4.63 billion shares from the Philippine Stock Exchange.

Lopez Holdings is the Lopez family’s holding firm for investments in major development sectors. FPH is the parent firm of the family’s energy investments.

On Wednesday, shares in FPH at the stock exchange fell 1.24% or P1 to close at P79.50 each. — Revin Mikhael D. Ochave

Plant-based food and ready-to-eat meal packs: Food trends that will define 2021 and beyond

IT’S NO question that the pandemic has changed the way people are living their lives and one of the more prominent changes is the shift towards a diet focused on one’s health and wellness, according to a representative of the San Miguel Foods Culinary Center (SMFCC).

“Consumers are more open and ready for alternative flexitarian diets that support immune health, cognitive function, promoting relaxation, and relieving stress,” said Llena Arcenas, SMFCC culinary services manager in a webinar held last Tuesday.

“Such a rise in the health and wellness movement is attributable to the pandemic situation and seeping awareness for sustainability,” she added.

During the webinar, the culinary arm of San Miguel Food and Beverage highlighted five key trends: plant-based food, upcycling, ready-to-eat packages, global ethnic flavors, and functional indulgence.

Ms. Arcenas highlighted meat substitutes for products such as bacon and eggs, that use plant and fungi-derived products like coconut oil, tapioca, and mushrooms. According to her, ingredients to watch out for are mushrooms, tofu, and chickpeas.

San Miguel has also joined the plant-based game via Veega, their line of sausages, nuggets, and other plant-based breakfast food substitutes.

As for the upcycling trend for food, she explains, “It’s all about finding purpose. It’s about utilizing underused parts; creating by-products or waste into usable materials or products of high value.”

She pointed out the use of plant fibers to make textiles, but in the kitchen, there are coffee grounds that can still be used for flavoring; or else the old practice of reusing stale bread for pudding.

And to exemplify said trend, the SMFCC sent this writer an empanada that showcased nose-to-tail dining. Magnolia chicken innards that would otherwise have been discarded were chopped, fried, and seasoned, resulting in a filling that was perfectly like beef.

Ms. Arcenas credits the ready-to-eat trend to the changing dining landscape. “These will dominate this year due to the sustained home dining given the restricted traveling, and work- and study-at home situations,” she said, then noting, “These products are also a good means to ward off cooking fatigue of home cooks.”

While she cited Purefoods Ready to Eat meals, she points out various restaurants offering frozen or heat-then-eat packs. She also said that cake and cookie mixes (which the company also offers) are part of the trend.

Consumers, according to Ms. Arcenas have also gravitated to cooking different cuisines as many are still not able to travel freely due to existing travel restrictions and thus contributing to the “global ethnic food trend.”

“Consumers will turn to culinary adventure and explore exotic and unconventional flavors and ingredients,” she explained.

Trends in tastes she forecasts veer towards the Mediterranean, Indian, and North African; but also regional cuisine like more obscure Chinese, Filipino, and Japanese flavors.

Lastly, Ms. Arcenas explained why “functional indulgence” is becoming a trend. “Instagrammable and indulgent food and drink will not only be crafted to look and taste great; but will be beneficial to one’s well-being, [by] using functional food and ingredients. As people care more about their health, innovations in food and drinks go beyond beauty and deliciousness to promoting good immunity.”

For this, she predicts that high-antioxidant food, spices, and fermented food will be highlighted.

Ms. Arcenas says that her predictions come from a lot of “desktop research, brainstorming, and trade checks,” but also a review of a previous food forecast she made back in 2018, when she attended the 2017 National Restaurant Association Show in Chicago. “The trends that I saw back in 2017 are dominating now. That’s why the trends that we are saying here right now, they might be more aggressive or dominant in two to three years time.”

To learn more about San Miguel’s plant-based alternatives, here’s a story on Veega (https://www.bworldonline.com/veega-tastes-like-chicken/). A smaller company, meanwhile, makes more luxurious plant-based offerings such as barbecued “ribs” (https://www.bworldonline.com/avoiding-meat-during-the-pandemic/). For upcycling trends, one can see how we’ve used organ meats to make a meal (https://www.bworldonline.com/have-a-heart/), but also how a Filipino company harvests pineapple leaves and turns them into luxury “leather” (https://www.bworldonline.com/from-waste-to-high-taste/). — Joseph L. Garcia

BPI to absorb thrift unit

BANK OF THE Philippine Islands is looking to absorb its thrift unit BPI Family Savings Bank (BFSB) within the year, the listed bank said on Wednesday.

The move will still be subject to shareholder and regulatory approvals, the Ayala-led lender said in a filing with the local bourse.

“As One BPI, our 8.5 million customers will be able to enjoy the full suite of the BPI group’s products, via all our digital and physical channels,” BPI President and Chief Executive Officer Cezar P. Consing said in a statement.

“Similarly, as One BPI, our employees will have the ability to work across a larger, more varied bank, while having continuity of tenure and job level,” he added.

BPI added that the reduction in the gap in the regulatory reserve requirements between commercial banks and thrift banks was also a factor for the move.

It said they hope to complete the merger within the year.

“The integration of both entities will provide considerable advantages to the customers and employees of BPI and BFSB, and present potential synergies that will benefit shareholders,” BPI said.

“If our customers and employees are better off, our shareholders will also benefit. This merger is timed to provide us with the platform to help lead the economic recovery that is sure to come,” Mr. Consing added.

BFSB is the country’s largest thrift bank with P287 billion in assets, P235 billion in deposits and P227 billion in loans, with the lender’s portfolio mostly focused on the housing and auto sector. The thrift bank has about 3,000 employees.

Its parent bank BPI’s net income declined 33.7% to P5.5 billion in the third quarter of 2020 as it set aside higher loan loss reserves amid the pandemic. This brought its net profit for the first nine months to P17.17 billion, down 22.1% from the P22.03 billion booked in the comparable 2019 period.

The listed lender’s shares dropped by P1.30 or 1.54% to close at P83.20 apiece on Wednesday. — L.W.T. Noble

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