Philippine bank BDO acquires thrift bank The Real Bank

It’s its third consecutive year of acquisitions.

Philippine-based BDO Unibank Inc. (BDO) said it has entered into an agreement to acquire all recorded assets and liabilities of thrift bank The Real Bank, Inc. (Real Bank).

According to a research note from Maybank Kim Eng, the transaction, which includes 24 branches around Metro Manila and Luzon, is still subject to closing conditions and regulatory approvals.

The purchase also marks the third consecutive year BDO has made an acquisition. In May 2012, it bought Rural Bank of San Juan, Inc. which brought in 30 branches while Citibank Savings, purchased in Nov 2013, added 10 branches.

Here’s more from Maybank Kim Eng:

Real Bank currently ranks as the sixteenth largest thrift bank in the country, with assets of PHP8.5b, loans of PHP3.9b, deposits of PHP7.4b, liabilities of PHP7.7b and an estimated net operating loss in 2013.

The bank had gross non-performing loans amounting to PHP3.2b and net NPLs of PHP2.7b. As a share of total loan portfolio, the gross NPL ratio is at 71.7%, way above the thrift bank industry average of 5.1%. Net NPL ratio stands at 60.1%. Tier-1 capital is at 5.43% while capital adequacy ratio is at 6.34%.

The latter is also below the sector average of 16.3%.

BDO management has been clear about taking a defensive stance to strengthen its position in the country amid the upcoming ASEAN integration and the recent approval of Senate Bill 2159 allowing foreign entrants to own up to 100% of local banks.