MUFG to buy 20% of Philippine bank
MANILA: Mitsubishi UFJ Financial Group Inc, Japan’s biggest bank, agreed yesterday to buy a 20% stake in Philippine lender Security Bank Corp for 36.9 billion pesos ($773 million) as it deepens its expansion in Southeast Asia.
Security Bank accepted MUFG’s offer to buy 150.7 million newly-issued common shares at 245 pesos each and 200 million preferred shares at 0.1 peso apiece. That represents an 81% premium on Security Bank’s Wednesday closing price of 135 pesos.
“The deal will be the largest equity investment in a Philippine financial institution by a foreign lender, allowing Security Bank to accelerate its growth strategy and expand its branch network,’’ the Manilabased company said.
“Security Bank will benefit from the deal by having a bigger war chest to execute its strategy,” Charles William Ang, an analyst at COL Financial Group Inc, said by telephone.
“The deal is also a sign that foreigners are still very bullish about our banking industry, which remains under-penetrated. There are more opportunities for growth and profit compared with Japan.”
MUFG is paying a 78% premium to Security Bank’s average price over the past month, the fourth highest among all bank acquisitions in Southeast Asia, according to data compiled by Bloomberg.
The price of 245 pesos a share is 2.8 times book value.
“People say that it’s expensive, but we believe this is the right price,” Go Watanabe, chief executive officer for Asia-Oceania at MUFG’s main lending unit, said at a briefing in Manila. “We believe this price is fair, calculating the intrinsic or future value of the bank.”
The investment will make MUFG’s Bank of Tokyo-Mitsubishi UFJ Ltd unit the second-biggest shareholder of Security Bank, behind the Dy family.
The deal is expected to close in the middle of the year, and MUFG will appoint two directors to Security Bank’s board.
“Security Bank will target 500 branches by 2020 from the current 262,’’ the company’s president Alfonso Salcedo told reporters.
The investment will allow the Philippine bank to tap new markets through MUFG’s relationships with Japanese companies and its global network.
Security Bank’s operations range from retail banking to brokerage services and leasing, its website shows.
“Indonesia and India remain missing parts in MUFG’s expansion in Asia,’’ Watanabe said.
The financial group has been expanding in the region as a declining population and near record-low interest rates constrain growth at home.
It was among 12 firms that expressed interest in buying United Coconut Planters Bank from the Philippine government, people with knowledge of the matter said last June.
MUFG owns 77% of Thailand’s Bank of Ayudhya and it bought a 20% stake in stateowned Vietnamese lender VietinBank in 2013.