March 17, 2014

UBP offers to acquire Export Bank

The Philippine Daily Inquirer reported that Union Bank of the Philippines (UBP) has offered to come in as a strategic investor in Export and Industry Bank (EIB). UBP president Victor Valdepenas confirmed that the bank has formally expressed interest to invest in EIB inline with the bank’s growth goals ahead of the ASEAN integration. If UBP acquires EIB, it may be offered the same government financial assistance that was previously extended to EIB.

Our take: It remains to be seen what UBP plans to offer for EIB and what kind of incentives it can avail of from the government to make the deal feasible. At any rate, we believe that this may entail some more negotiation with the regulator. In light EIB’s financial and legal problems, we think that the transaction will only make sense for UBP if this will come with incentives on top of the usual financial assistance / income support that is extended to acquirers of troubled banks. – WealthSec