A paper on strategic management Equitable PCI Bank

• Main Author: Carnecer, Alfonso S., Jr.
• Format: text
• Language: English
• Published: Animo Repository 1999
• Subjects: Bank mergers > Philippines; Banks and banking > Philippines; Equitable PCI Bank
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/3911
• Institution: De La Salle University

Maybe its mass, or technology and globalization, or integration, or sheer vanity and ego, but there is a natural imperative toward scale... Scale matters, and bigger seems to mean better to most managers. -- Bruce Wasserstein. With these words, Wasserstein captured the prevailing mood in the Philippines banking and finance industry. Even the big are no longer big enough, as if obesity is the one sure sign of prosperity. Everyone feels so small, so vulnerable and so insecure that those who have no probable partners have the forlorn look of wallflowers in a dance. No one wants to be alone. There was the relativity quiet union between the Bank of the Philippine Islands (BPI) and Ayala Insurance Holdings (AIH), which was low-key probably because it involved a bank and an insurance group. And on 12 May 1999, the biggest merger in the history of Philippine banking accrued. Philippine Commercial International Bank (PCIBank)'s to major stockholders, Eugenio Lopez, Jr., and John Gokongwei Jr., sold their shares to a consortium composed of the Social Security System (SSS), the Government Insurance System (GSIS) and Equitable Banking Corporation among others. This amounted to a 72% stake in the bank. At P31.9 billion, this is the largest acquisition of a bank in the country's banking history. The record-setting deal, where JP Morgan and ING Barrings acted as financial advisers to PCI Bank's shareholders, is expected to blaze the trail for more mergers and acquisitions in the banking industry. The union of two of the country's biggest and strongest universal banks-- PCI Bank and Equitable Bank-- has formed enterprise, heralding the emergence of the second largest bank in the country today. With the buyout, Equitable PCI Bank was born. It would've been just another buyout save for the fact that PCI Bank is bigger than EBC. It defied logic, but happened. Like the great boa constrictor, probably the only animal capable of swallowing creatures bigger than it is . PCI Bank was swallowed by EBC. Prior to the buyout, several bigger banks were already interested in buying PCI Bank, notably the two biggest banks: Metropolitan Bank and Trust Company (Metrobank) and the Bank of the Philippine Islands. They were conducting a due diligence study when EBC appeared from nowhere and bought PCI Bank. Metropolitan and BPI expressed relief that neither of them was able to buy. Had one of them succeeded, the bank would be even more formidable than before and will be firmly entrenched in the top position, or in the case of BPI, to finally overtake Metrobank. Given the unique characteristics of the merger, this paper tries to look at the institution, now legally called Equitable PCI Bank from the eyes of the Chief Executive Officer, with the cut-off date set at the end of 30 June 1999. The main reason for this is the unavailability of data from the merged institution. The author first analyzes each institution individually and then as one, and then proposes strategies to meet its business objectives.