East West Bank to pay for acquisition in just one tranche

MANILA, Philippines - East West Banking Corp. will pay for its acquisition of the local banking units of American International Group (AIG) in just one tranche. Filinvest Development Corp., East West’s parent, said it will fully pay $48.5 million in US currency for the purchase of Philam Savings Bank Inc., PhilAm Auto Finance & Leasing, Inc. and PFL Holdings Inc., the company said in its disclosure to the Philippine Stock Exchange (PSE). Until these were acquired, these three entities were all Philippine subsidiaries of Philippine-American Life and General Insurance Co. (Philamlife), which is subsumed under US-based AIG. AIG sold its local assets to pay for its debts in its home country. The acquisition is seen to be completed by the second quarter of the year upon approval by the Bangko Sentral ng Pilipinas (BSP), the company said. “In arriving at the price, East West utilized principally the discounted cash flow valuation methodology in relation to the three entities’ nominal book values," Filinvest said. Besides the companies’ abilities to generate cash flow, East West said it also recognized “inherent values to be generated from the synergies of the combined institutions particularly in areas of manpower, licenses, and data centers." The acquisition will make East West Bank the Philippines’ sixth-largest credit card issuer in terms of cards-in-force and card receivables. Moreover, besides boosting its assets to P63 billion from P49.924 billion as of 2008, East West will also expand its credit card receivables to P3.7 billion. PhilAm Savings had deposits of P9.7 billion as of last year and has nine branches in the country, including six in Metro Manila. - GMANews.TV