May 8, 2012 / 10:12 AM / in 6 years

UPDATE 1-Malaysia's CIMB buys into San Miguel bank arm for $300 mln

* Deal values bank at 1.14 times price-to-book ratio

* Agreement follows seven months of talks

* Purchase nearly completes CIMB expansion plans in SE Asia (Adds CIMB statement, details)

By Yantoultra Ngui and Rosemarie Francisco

KUALA LUMPUR/MANILA, May 8 (Reuters) - Malaysia’s second-largest lender CIMB Group Holdings Bhd will buy 58 percent of the unlisted banking arm of the Philippines’ San Miguel Corp for nearly $300 million, the companies said on Tuesday, as CIMB expands across Southeast Asia.

The purchase, which follows seven months of talks, marks CIMB’s entry into the Philippines and follows its acquisition last month of several Asian units of Royal Bank of Scotland Plc.

For San Miguel, the deal provides additional cash to fund other investments, including its acquisition last month of a minority stake worth around $500 million in flag carrier Philippine Airlines.

CIMB CEO Nazir Razak told reporters the Malaysian lender would pay around 881 million ringgit, or 12.2 billion pesos ($289 million), in cash for the controlling stake in Bank of Commerce (BoC), giving it a presence in every Southeast Asian country except Laos.

The deal valued Bank of Commerce at a price-to-book ratio of 1.14 as of the end of 2011, but that would rise to an effective ratio of about 1.3 times after the bank and its shareholders comply with the Malaysian lender’s accounting and provisioning policies, CIMB said.

“BoC is small today but it can grow quickly with its low loan-to-deposit base and high capital ratios,” Razak said. “BoC also strengthens CIMB Group’s overall regional value proposition of facilitating intra-ASEAN investments and trade as well as travel.”

Razak said the acquisition, which would increase the group’s retail network to 1,239 full branches, would not have an impact on CIMB’s earnings this year.

CIMB has been in talks to buy a part of Bank of Commerce, the 16th largest lender by assets in the Philippines with 121 branches, since October of last year.

San Miguel’s stake in the bank is held by its subsidiaries San Miguel Properties Inc and San Miguel Retirement Fund. After the transaction, San Miguel Retirement Fund will become the bank’s largest minority shareholder with a 27 percent stake.

Shares of San Miguel closed nearly 1 percent higher on Tuesday, surpassing the main index’s 0.2 percent gain. CIMB climbed as much as 1.5 percent before shaving its gains to 1 percent.

At the end of 2011, Bank of Commerce had total assets valued at 96 billion pesos. ($1 = 42.3550 Philippine pesos) (Editing by Edmund Klamann)

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