PHILIPPINE Business Bank (PBB), a listed savings bank owned by former ambassador Alfredo Yao, is looking to partner with a foreign bank to be able to upgrade into a unibank.
PBB president Rolando Avante told The Manila Times that the bank has received offers of partnership with sizeable foreign banks, mostly from the Asean region.
While not naming the foreign suitors, Avante said PBB is more inclined to enter into a partnership with a foreign bank than with a local one, given the higher benefits and added value.
“There are a lot [of talks with interested foreign banks]. From a strategic initiative, our intention and what we wanted is to partner [with foreign players]but we still need to pick the right one. We seek for stability,” Avante said.
“There are many [who are interested]. It’s mostly from the region. There are discussions, yes, but you have to really see if the partnership is the right fit,” he added.
Currently, PBB is ranked No. 27 among Philippine banks in terms of assets but ranks first in the savings bank category.
Avante said the bank plans to become a unibank later on by partnering with a foreign bank that can provide them expertise in growing not just locally but also in international markets served by the potential partner.
“Our dream is to become No. 1. If we get to find a strategic partner, that is one of the common agreements that we should have,” the PBB president said.
Asked why the bank prefers a foreign partner, Avante said: “If it is foreign, the probability is that the bank grows bigger. You’re going to do more, employ more, and you have opportunities to grow your business where your partner is present. Since they are crossing markets, they would be sizably big and they will bring expertise, strategic know-how.”
In contrast, he said that if PBB partners with a local bank, there would be reduced value since there would be “overlaps” in accounts, branches and employees. “With local, you’re basically covering the same market. If we’re looking at the prices, we’ll go with the local. But we would really want to have added value, that’s why,” Avante said.
He added that PBB is also looking for other acquisitions and is “opportunity-driven” when it comes to expanding its reach.
“We’re opportunity driven. We’re talking with a lot of banks. The industry is calling for it. The BSP [Bangko Sentral ng Pilipinas] is increasing capital [requirements]; they have been encouraging consolidation, that’s why they are raising capital requirements,” Avante said.
The bank has just capped off the acquisition of Insular Savers Bank and Bataan Savers Bank last year, adding 11 branches to its network.
In 2015 PBB added 17 branches, including those from the recently acquired banks, which raised its branch network to 144. Avante said 60 percent of the 144 branches are located in the provinces while the balance is in Metro Manila.
For 2016, the PBB president said they are looking to open 15 to 20 branches. The bank is allotting P300-P500 million in capital expenditure to fund branch openings, IT systems, and financing support for recently opened branches.
Avante said a PBB branch costs P4 billion on average to build and is expected to be profitable in two-and-a-half to three years after its opening.
In terms of profits, Avante said the bank’s earnings have been relatively flat because of “increased competition and expansion” costs.
In the first nine months of 2015, PBB saw its net income dip by 2 percent to P471 million from P481 million the same period last year as expansion cost offset the fourfold increase in trading gains.
Avante said PBB is looking to grow its profits “above industry growth” yearly.
Incorporated in 1997, PBB is a thrift bank that mostly caters to small and medium enterprises (SMEs). Its branches are located in areas with high SME concentration such as Caloocan, Malabon, Navotas, Valenzuela, and Quezon City, as well as in highly urbanized cities outside Metro Manila such as Cebu, Davao, and Bacolod.