THE Philippine Competition Commission (PCC) has approved the acquisition by Thailand-based Bank of Ayudhya Public Co. Ltd. of 50% of the outstanding capital stock of Security Bank Corp.’s consumer finance subsidiary.
Security Bank told the Philippine Stock Exchange on Thursday that it had received the commission’s approval of the deal. Bank of Ayudhya — better known as Krungsri — will own 50% of SB Finance Co., Inc. while the listed universal bank will keep a 49.54% stake.
PCC in a statement on Thursday said that the transaction is unlikely to lead to a substantial lessening of competition. It said that there would be enough competitive constraints on the merged entity, noting that many competitors, including banks and other financial institutions, offer loan products.
“Given the limited market share of the merged entity, PCC also determined that the parties behind the transaction would have no incentive to raise interest rates and decrease the quality of services unilaterally,” the commission added.
PCC will take no further action on the deal.
Bank of Ayudhya’s parent entity is Japanese banking corporation Mitsubishi UFJ Financial Group, Inc. In the Philippines, Mitsubishi UFJ runs MUFG Bank, Ltd. and Acom Consumer Finance Corp., which offers unsecured personal loans.
Last year, Security Bank signed a partnership with Krungsri to further expand its retail services offered to Filipinos using the foreign bank’s strategies.
Krungsri is the fifth-largest bank in Thailand based on assets, loans, and deposits. It also has a regional network of 698 branches, including those in Laos, Myanmar, and Cambodia.
“By localizing the strategies that propelled Krungsri to become Thailand’s market leader in consumer finance, SB Finance is well positioned to scale the business faster, launch better and more innovative product variants, serve more customers,” Security Bank President and CEO Sanjiv Vohra said.
Security Bank posted total loans and receivables of P449.6 billion in the first half, down by 0.2% from P448.6 billion in end-December 2019.
The bank plans to develop more digital tools in addressing the financial needs of consumers as the coronavirus pandemic persists. It reported a 170% expansion in online banking usage from March to August when stricter lockdown policies were imposed to help contain the spread of the virus.
PCC continues to review transactions entered into by entities before the implementation of the Bayanihan to Recover as One Act, or Bayanihan II.
Under Bayanhian II, parties involved in mergers and acquisitions with transaction values below P50 billion are exempt from notifying the commission in the next two years. — Jenina P. Ibañez and Kathryn Kristina T. Jose