FOLLOWING THE central bank approval of its equity purchase in Security Bank Corp., Bank of Tokyo-Mitsubishi UFJ Ltd., (BTMU) Japan’s largest bank, is looking to get involved in infrastructure projects in the country, its chief executive officer said.
Go Watanabe, CEO of BTMU Asia & Oceania region, said the commercial banking unit of Mitsubishi UFJ Financial Group (MUFG) on Feb. 29 secured the green light from Bangko Sentral ng Pilipinas (BSP) for its 20% equity investment in the country’s fifth largest bank by market value in a deal valued at P36.943 billion ($782 million). This investment is the largest so far by a foreign entity in a Philippine financial institution.
“BTMU has no PPP (public-private partnership) investment yet but we have been thinking to participate in the projects included in the pipeline... PPP, particularly in infrastructure, is a necessary project for this country and Japanese companies are showing strong interest to participate in them,” Mr. Watanabe said in a media briefing Tuesday.
“BTMU is the best project finance bank. Together with the good peso liquidity from Security Bank, our team is the best team to support the PPP projects and encourage Japanese customers to participate in the program,” he added, noting that BTMU and Security Bank will likely serve as financiers to consortiums that will be involved and as financial advisers to interested parties.
“We haven’t decided yet [how we will participate in PPP projects] but maybe we could provide loans and be venture partners,” the BTMU official further said.
Security Bank President Alfonso L. Salcedo, Jr. earlier said “additional capital from the stake sale and the expertise of BTMU in project finance will facilitate Security Bank’s participation in big ticket infrastructure projects.”
BTMU Manila Branch General Manager Tadahiro Miyamoto said the foreign lender will help bring in more foreign firms in the country, particularly from the automotive and manufacturing sectors, following its strategic partnership with Security Bank.
“The challenge now is how to encourage overseas companies to go here. We will support this [but] we need more support from the government,” he said during the same briefing in Makati, noting that the government could look at providing more tax perks, improving infrastructure and lowering power costs to attract more foreign investors.
Mr. Miyamoto cited the country’s “very good” prospects with its population size and expanding middle class, as the good economic gains are projected to continue in the next few years.
“The Philippine economy has been growing. Among the ASEAN countries, the Philippines is the one with the biggest growth potential. It is the missing part in BTMU, that’s why we decided to make strategic partnership and it would contribute much to BTMU’s prospects. We would like to expand more business here,” Mr. Watanabe said.
Meanwhile, BTMU said it is ready to help Security Bank not just grow its size, but also in terms of technology transfer, as it aims to push the local lender to become one of the country’s top banks.
Mr. Salcedo earlier said that with the additional capital from the deal, the local lender is looking “at being at the top four, five banks in the industry sooner than later.”
As of end-September, Security Bank was ranked the sixth largest domestic universal lender with total assets of P482 billion.
The partnership, which will also allow Security Bank to leverage on the BTMU’s extensive relationship with Japanese corporates, global network and expertise to tap new niche markets, will raise P36.9 billion in capital for the Philippine lender, increasing its shareholder capital from P52.4 billion as of September to P89.3 billion on a pro-forma post-transaction basis.
Mr. Salcedo had said the transaction will help the local lender accelerate its expansion plans “at a faster pace and with more scale.”
The bank seeks to double its current market share in both loans and deposits to between 8-9% from the current 4% range, with aggressive expansion plans.
It will also scale up its branch network at a “much faster pace” to more than 500 by 2020 from around 262 currently.
Security Bank posted a net income of P7.7 billion in 2015, 7% higher than the P7.16 billion in earnings it booked the year prior, on the back of sustained growth in its lending activities.
Security Bank shares closed at P154.90 apiece yesterday, down by 10 centavos from the previous day’s P155-per-share close.
Meanwhile, BTMU is currently “very comfortable” with its 20% stake in Security Bank setting aside any plans to hike its interest in the local lender, at least for now.
“At this moment, BTMU’s 20% is very comfortable, at this moment we have no plans to increase the share. In the future, if we see opportunity, and both parties agree, then we might think about it but mutual agreement is very important,” Mr. Watanabe said.
Now that it has successfully found a partner in the Philippines, BTMU is eyeing Indonesia and India as its next targets, although the financial giant is “not in a hurry” and will continue to look at opportunities.
source: Businessworld
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