BDO sells controlling stake in leasing unit
The Sy family has entered into an agreement to sell its controlling stake in BDO Leasing and Finance (BDOLF) to a third party.
As of the end of December, BDO Unibank Inc. held 88 percent of the publicly held leasing and finance firm.
BDOLF president Roberto Lapid said newly incorporated BDO Finance Corp. would assume current lease transactions booked in the company to provide continuity to existing clients.
“We wish to reassure BDOLF clients that their financing requirements will continue to be serviced, and there will be no effective change in their existing lease arrangements that will be assumed by BDO Finance,” Lapid said.
BDO said the restructuring of its leasing business is being undertaken to optimize the financial needs of clients in light of new accounting regulations covering lease transactions.
Lease transactions are less attractive option to corporate borrowers compared to the past as the International Financial Reporting Standards (IFRS 16) that took effect January last year requires leases to be recognized on-balance sheet, similar to a loan facility.
BDO Finance will provide customers continuing access to lease products and services.
Meanwhile, clients who now find regular bank loans more attractive vis-à-vis leases can access BDO’s wide range of products and services.
BDOLF will be renamed and its articles of incorporation and by-laws will be amended to reflect the new business direction.
As required by regulation, a tender offer will likewise be undertaken by the buyer to provide minority shareholders an opportunity to sell their BDOLF shares.
“The timetable and details of the tender offer will be announced by the buyer in due course. The sale transaction is subject to closing conditions, including approval by regulatory authorities,” BDO said.
Last year, BDOLF raised P165.5 million after it sold its 40 percent stake in MMPC Auto Financial Services Corp. (MAFS) to JACCS Co. Ltd. MAFS is a joint venture between BDO Leasing and JACCS, Sojitz Corp., and Mitsubishi Motors Philippines Corp. that was established in 2016.
BDOLF booked a net loss of P38.5 million in January to September last year due to margin compression as liabilities adjusted faster to current interest rates compared to its lease receivables. Gross revenues slipped five percent to P2.26 billion.
Total assets fell 23 percent to P32.5 billion mainly due to investment maturities and sale of part of the company’s lower yielding portfolio.
BDO is the country’s largest bank in terms of total assets, loans, deposits and trust funds under management. It has more than 1,400 operating branches and over 4,400 ATMs nationwide.
It also has full-service branches in Hong Kong and Singapore as well as 20 overseas remittance and representative offices in Asia, Europe, North America and the Middle East.