April 21, 2014

BDO to consider bidding for UCPB

The Philippine Daily Inquirer quoted the chair of BDO Unibank (BDO, Buy) as saying the bank will consider bidding for United Coconut Planters Bank (UCPB) when the government proceeds to privatize the bank. BDO is awaiting the term sheet for the planned privatization. Government has mandated Standard Chartered Bank to look into the feasibility of privatizing the government-sequestered shares in UCPB.

Our take: As we mentioned in a previous banking report (see “Industry Consolidation Continues: UCPB Up For Sale,” January 29, 2014), UCPB may come up as a possibly interesting acquisition for local banks. UCPB currently has about P248b in assets, P84b in loans and 188 branches. Successfully acquiring UCPB can solidify BDO’s position as the biggest bank in the country.

However, the government would have to draw up a detailed term sheet to outline how the acquiring bank will come in, in light of UCPB’s ongoing rehabilitation. We believe that the offer becomes attractive if the the government can offer various deal sweeteners to potential acquirers. – WealthSec