By Jonathan Browning and Joyce Koh
East West Banking Corp., the Philippine lender that took over some of Standard Chartered Plc’s local operations last year, plans to sell a minority stake to a strategic investor, according to people familiar with the matter.
The retail-focused bank is working with an adviser to sell about a 20 percent stake, the people said, asking not to be identified because the discussions are confidential. Shares of East West have risen 26 percent this year, giving the lender a market value of about $702 million and making it the second-best performer on a Philippine Stock Exchange index of financial stocks.
Philippine banks have been bringing in overseas partners and selling stock as they seek to fund loan growth and meet higher capital requirements. Japanese and Taiwanese lenders have been drawn to invest in the country after the Philippines loosened its rules on foreign bank ownership in 2014.
East West, the country’s thirteenth-largest lender by assets, said this month it’s open to taking in a new strategic investor. Larger rival Security Bank Corp. sold a P36.9-billion ($740 million) stake last year to Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank. East West chief executive officer Antonio Moncupa declined to comment on a potential stake sale when reached by phone.
Wealthy families running some of the largest Philippine banks need to attract foreign capital and know-how if they are to withstand growing competition from overseas rivals, the country’s bank regulator said in January last year. Any transaction would add to the $3.1 billion of acquisitions targeting lenders in the country over the past five years, data compiled by Bloomberg show.
EastWest’s first-quarter net income climbed 54 percent to P1.2 billion, while total revenue increased to P6 billion, according to the bank’s website. It completed its takeover of Standard Chartered’s retail banking business in November last year, with the UK lender transferring its credit card operations, personal loans and customer deposits.
EastWest, the financial subsidiary of the Filinvest Group, said a 25-percent increase in net income this year was realistic after posting a remarkable growth in the first quarter.
“As we have said previously, we expect to see steady increase in productivity after we have completed our expansion and as our stores mature. Business has been good,” EastWest vice chairman and chief executive Antonio Moncupa Jr. said earlier
“We expect revenue growth to continue besting increases in costs. At the rate we are going, a 25-percent increase in income this year to around P4.25 billion is doable,” Moncupa said. With Bloomberg