Kingfisher School of Business and Finance

Lucao District, Dagupan City

2nd Semester A.Y. 2017-2018

FINANCE 13

Submitted by:

Bataan, Charisse

Guiling, Camille

Mercado, Jewel Mae

Ulit, Genesis Francis

Submitted to:

Rose Kristy Sindayen,CPA

 Instructor

I. PRE-ACQUISITION

In 21st century businesses are the game of growth. Every business want the

optimum market share (growth) over their competitors, so companies are trying to get

optimum growth by using the most common shortcut i.e. Merger and Acquisition (M&A). The

growth main motive is financial stability of a business and also the shareholders wealth

maximization and main coalition's personal motivations. Mergers and acquisitions (M&A)

provides a business with a potentially bigger market share and it opens the business up to a

more diversified market.

Last December 27, 2012, the BSP approved the Bank's move to acquire Legazpi

Savings Bank. With the acquisition, Legazpi Savings Bank becomes a wholly owned

subsidiary of the Bank. Robinsons Bank intends to utilize the capacity and branch network

of Legazpi Savings as its vehicle to engage in countryside banking and microfinance

lending.

Robinsons Bank Corporation

Robinsons Bank Corporation is a full service commercial bank and a financial

services arm of the JG Summit Group of Companies. The bank has for its cornerstone a

business portfolio of market leaders, a solid financial position, a formidable management

team, and it has a vision of leading the country to global competitiveness and making the life

of every Filipino better. The principal banking products and services of Robinsons Bank

includes deposit products, corporate, commercial and consumer loans, corporate banking,

trade services, treasury and trust funds.

The bank's acquisition of the branches of ABN Amro Savings Bank (Philippines) in

year 2002 propelled the Robinsons Savings Bank to be the seventh largest savings bank

during that period. In year 2010, the bank acquired the controlling interest of the Royal Bank

of Scotland (Philippines) which was renamed as the Robinsons Bank Corporation. Then by

December of the same year, BSP approved the merger of Robinsons Savings Bank and

Robinsons Bank Corporation with the Robinsons Bank Corporation as the surviving entity.
 Due to this merger, the bank became the 14th largest commercial bank and the 31st largest

bank in the Philippine banking system during that time.

Robinsons Bank is the newest rising bank and fastest growing commercial bank in

the Philippines in terms of capitalization and asset size. The bank is now positioned not

only to be more responsive in meeting bank requirements of its retail customers and

business partners, but also to fully serve the general banking public by its wide array of

products and services.

Legazpi Savings Bank

Legazpi Savings Bank, Inc. is a savings bank that operates as a thrift bank. It was

founded by four prominent Bicolano families, the Los Banos of Legazpi City, the Bichara of

Ligao, Albay, the Sabido of Polangui, and the Giongco of Rosario,Cavite with Bicolano

Roots.It was located at the Los Banos building along Rizal and Mabini Streets in Legazpi

City.

Luis Los Banos was the founding chairman president of Legazpi Savings Bank and

by year 1993, Don Alfonso Bichara started when take control expanding the bank.

Legazpi Saving Bank products and services include checking and savings account;

auto, housing, salary, friendly tuition, teacher salary loans; and revolving credit lines, bills

purchased lines, sales contract receivables, and lease purchased agreements. Also,

Legazpi Savings Bank offers properties for sale in Albay, Sorsogon, Camarines Norte,

Catanduanes, Masbate, Cavite, and Laguna provinces.

Rationale for Acquisition

Robinsons Bank Corporation is a full commercial bank which engaged in a wide

array of products and services - deposits, loans, trust and treasury, remittances and other

deposit related products. Since Robinsons Bank Corporation is committed to position itself

to a further growth in business and looking for opportunities in the market, it has acquired

the Legazpi Savings Bank in December 2012. Due to confidentiality, the acquisition 0cost

was not revealed by the former majority owners yet, the bankers are speculating that it cost

hundreds of millions. The following are reasons why Robinsons Bank Corporation acquired

Legazpi Savings Bank:

 a. Growth

Different businesses are open in various growths that the market or the

different opportunities may give. Thus, Robinsons Bank Corp. acquired Legazpi

Savings Bank to grow more on the kind of business they have. The growth is not

only the growth in business itself but also the growth of management, the board, and

the employees in handling a new kind of business or to new environment.

b. Expansion

Robinsons Bank Corporation is considering on expanding its business thus

the acquisition takes place. As Reynold Y. Gerongay, President and CEO/Director of

Robinsons Bank Corporation states that "We are very pleased to be given this

opportunity to strengthen and expand our banking activities in Bicol and are

committed to the continued growth of Legazpi Savings Bank," it is clearly stated that

the acquisition takes place because the Robinsons Bank wants to expand their

business. Also the acquisition takes place because Robinsons Bank intends to utilize

the capacity and branch network of Legazpi Savings as its vehicle to engage in

countryside banking and microfinancing lending.

II. CONSIDERATION AND TRANSFER

Agreement between Robinsons Bank and Legazpi Savings Bank

The acquiring firm stated that merging with the target firm is a great opportunity for them

to strengthen and expand their banking activities in the areas which are covered by the target

firm and are committed to their continued growth. The acquisition of Robinsons Bank to Legazpi

Savings Bank is a horizontal merger because it is acquired in the same line of business.

The acquisition cost was not revealed by the former majority owners though bankers

here speculated that hundreds of millions was the price tag of the transaction. They highly

welcome this investment by Robinsons Bank. It is good to know that Legazpi Savings Bank will

now be part of a big conglomerate to the benefit of businesses and people in Albay as well as

neighboring provinces in the Bicol region.

Regulatory Requirements

The New Central Banking Act of 1993 (Republic Act No. 7653) and the General Banking

Law of 2000 (Republic Act No. 8791) vest the Monetary Board of the BSP with the power to

regulate and supervise financial intermediaries in the Philippines. Financial intermediaries

include banks or banking institutions such as universal banks, commercial banks, thrift banks

(composed of savings and mortgage banks, stock savings and loan associations, and private

development banks), rural banks, co-operative banks as well as branches and agencies of

foreign banks in the Philippines.

According to Section17 of General Banking Law of 2000— In the case of a bank merger

or consolidation, the number of directors shall not exceed twenty-one (21). The Bank has 11

directors, five of whom are independent directors.

Under BSP Circular No. 854 dated October 29, 2014, universal banks with more than

100 branches are required to have capital accounts of at least ₱20.0 billion. Commercial banks

with more than 100 branches, such as the Bank, are required to have capital accounts of at

least ₱15.0 billion, while thrift banks with a head office in National Capital Region and with more

than 50 branches are required to have capital accounts of at least ₱2.0 billion. These minimum

levels of capitalization may be changed by the Monetary Board of the BSP from time to time.

Under BSP Circular No. 732 (2011), as amended by BSP Circular No. 830 (2014) and

BSP Circular No. 832 (2014), commercial banks (including the Bank) are required to maintain

regular reserves of 20% against demand deposits, “NOW” accounts, savings deposits, time

deposits, negotiable CTDs, long-term non-negotiable tax exempt CTDs, deposit substitutes,

peso deposits lodged under Due to foreign banks and peso deposits lodged under Due to Head

Office/Branches/Agencies Abroad, 4% against long-term negotiable certificate of time deposits

under BSP Circular No. 304, 7% against long-term negotiable certificate of time deposits s

under BSP Circular No. 824, 4% against deposit substitutes evidenced by repo agreements,

and 6% against bonds.

III. POST- AGREEMENT

As Robinsons Bank gears up for 2017 to celebrate 20 years of financial excellence,

expansion continues as the Bank reaches greater heights. The total assets of the

Bank grew by 34.6% to ₱77.6 billion in 2016 from ₱57.7 billion in 2015,

outperforming the Philippine banking industry’s 12.4% for the same period. This

expansion in the Bank’s asset size is driven mainly by its growth in loans. In 2016,

loan growth climbed 40.7%, with both commercial and consumer loans having hefty

increases, thus keeping the Bank on track with its initiatives. In line with this, the

Bank’s gross loans were at ₱38.9 billion by end-2016, with commercial loans

improving by 42.9% to ₱27.8 billion and consumer loans by 40.0% to ₱5.2 billion.