THE Union Bank of the Philippines (UnionBank) announced on Wednesday that it acquired majority ownership in a Batangas-based thrift bank through its wholly owned subsidiaries.
In a statement, the Aboitiz-led bank said that City Savings Bank Inc. and UBP Investment Corp. (UIC) purchased a total of 70-percent stake in Bangko Kabayan (BK) Inc.
CitySavings holds 49 percent while UIC has 21-percent ownership in the thrift bank.
“BK is a very well-run bank with a decades-long track record of success and service to SMEs [small and medium enterprises],” CitySavings President and CEO Lorenzo T. Ocampo said. “We are excited to work with them to expand their business and reach.”
BK President Betty Romulo, meanwhile, said that the UnionBank group will allow the thrift bank to expand its digital banking offering.
“Being part of the UnionBank group gives us access to digital banking solutions that will improve BK’s services with no need for a brick and mortar expansion,” Romulo said. “We look forward to the technological and capital support from CitySavings and UnionBank to level up BK’s capacity and reach out to more clients faster.”
The Batangas-based thrift bank aims to further its financing for SME segment in the Calabarzon region with the digital capacity of UnionBank.
BK was established in 1957 as “Ibaan Rural Bank,” a development bank providing reasonably priced credit to small merchants and farmers.
“The bank’s focus on grassroots entrepreneurship is aligned with CitySavings’ overall strategy to strengthen its presence in the mass market segment,” the Aboitiz-led bank said.
UnionBank saw its profits decline by 17 percent to P11.6 billion last year from P14 billion in 2019 amid the surge in credit loss reserves.
Loan loss buffer reached P8.7 billion last year in anticipation of increase in nonperforming loans (NPL). This is more than four times the P1.9 billion it earmarked in 2019. NPL ratio rose to 5.1 percent from 3.1 percent. Total assets of UnionBank stood at P774.5 billion as of end-December 2020. Capital equity tier 1 ratio and capital adequacy ratio are currently at 15 percent and 17 percent, respectively.
Meanwhile, thrift bank subsidiary CitySavings recently raised P5 billion from issuance of corporate notes, proceeds of which are allocated to beef up bank assets. Of the total issuance, P1.5 million is set to mature in three years while the remaining P3.5 billion has a tenor of five years.
BDO Capital and Investment Corp. was the lead arranger and bookrunner of the transaction. Meanwhile, Development Bank of the Philippines, Philippine National Bank and Robinsons Bank were tapped as co-arrangers.
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