What goes around comes around.
Philam Savings Bank, a small thrift in the Philippines, is taking its cue from banks in the U.S. and Europe with its purchase of a credit card company — Philippine based AIG Credit Card Co. — for 800 million pesos ($15 million).
Don't look for Philam to stop there. Prior to the deal, the bank was the ninth largest in the country but has moved up several spots due to the acquisition. Philam officials reportedly admit that they are in the market for more acquisitions. "We want to grow organically, or through acquisitions, to be competitive and barge into the top five in the thrift banking system (in the Philippines)," according to a recent statement.
The deal size pales in comparison to the wave of billion dollar acquisitions in 2005 halfway around the world. London-based HSBC Holdings plc acquired credit card issuer
Metris Cos. for $1.59 billion in cash in August 2005. Meanwhile, Washington Mutual Inc. bought
Providian Financial Corp for $6.45 billion on August 2005 and the biggest deal based on valuation was
Bank of America Corp.'s purchase of MBNA Corp. for about $35 billion on July 2005.
Many U.S. banking analysts say the bank and credit card combinations make sense because credit card companies are a logical growth target for large banks, who may be near federal depository limits. Meanwhile, the addition of credit card companies to banks gives standalone credit card companies the extra financial strength they need. Standalone credit card companies have been struggling over the last couple of years.
MBNA, for example, closed a call center and laid off 1,000 management positions in early 2005. —Gerald Magpily
See article from Philstar.com
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