Bank of Tokyo-Mitsubishi UFJ Ltd., Japan’s biggest bank, is buying a 20 percent stake in the Philippines’ Security Bank Corp. in a deal expected to expand both institutions’ market reach.
Security Bank Corp. said the deal would infuse an additional P36.9 billion in capital with BTMU investing in newly issued common and preferred shares. The sale remains subject to regulatory approvals and other conditions.
Described as the largest equity investment in a Philippine financial institution by a foreign investor, the stake sale will increase Security Bank’s shareholder capital from P52.4 billion as of September 2015 to P89.3 billion on a pro-forma post-transaction basis.
“The additional capital will help us accelerate our strategy over the next three to five years of building our retail banking business as a third business pillar alongside wholesale banking and financial markets,” said Alfonso Salcedo Jr., Security Bank president and chief executive officer.
Salcedo said the bank would be able to scale up its branch network much faster, from the current 262 to more than 500 branches by 2020.
“We will be able to conveniently serve our customers with a larger network, offer them a comprehensive range of financial services, as well as make inroads into the Japanese business sector, tapping on BTMU’s expertise,” he added.
The strategic partnership will result in BTMU, the commercial banking entity of Mitsubishi UFJ Financial Group, becoming the second largest shareholder of Security Bank.
BTMU will be appointing two directors to Security Bank’s board, while Security Bank will become an equity affiliate of BTMU.
The Dy Group will remain as the biggest shareholder of Security Bank with majority voting control.
Through the partnership, BTMU aims to establish a comprehensive financial service platform, including retail banking, to meet clients’ needs in the Philippines. It has adopted similar equity alliance deals in Asia including Vietnam.
Seeking to take advantage of the fast-growing Philippine market and the economy’s attractive fundamentals, BTMU expects to expand its business platform indirectly through the investment in Security Bank, which is known for its retail and small and medium business capabilities that will be new business areas for BTMU in the country.
“BTMU has been focusing on Asia as one of its core markets for growth. It is a strategic intent for the bank to identify the right partner in the higher growth markets like the Philippines to deepen our presence, including through inorganic means,” said Go Watanabe, chief executive officer of BTMU for the Asia and Oceania region,
“This strategic partnership with Security Bank reinforces our Asia strategy and enables both parties to offer more comprehensive financial services to a wider range of customers in the Philippines. We believe in Security Bank’s growth strategy and are keen to play a role and be part of its transformational journey, “he added.
For Security Bank, the partnership with Japan’s largest banking group is expected to enhance shareholder value by accelerating the bank’s growth strategy, including the
expansion of its branch network and increasing its retail market penetration.
It also expects to tap BTMU’s extensive relationship with Japanese corporates, its global network, and diverse range of functions and expertise within MUFG.
“We are elated to have BTMU as a strategic shareholder and business partner. The transaction will position Security Bank as a large independent bank supporting the growth of the Philippines’ economy, with the strength and capabilities to compete with other larger financial institutions,” said Alberto Villarosa, Security Bank chairman.
