The Philippine Competition Commission (PCC) has cleared the sale of 50 percent of SB Finance Company Inc., a subsidiary of Security Bank Corp., to Thailand’s Bank of Ayudhya Public Limited (Bank of Ayudhya).
The transaction will give Bank of Ayudhya a foot into the local business of financing and leasing through extension of facilities to mass market consumers, and specializing in unsecured personal loans.
Post-transaction, Bank of Ayudhya will own 50 percent of SB Finance, Security Bank’s consumer finance unit, while the latter will retain a 49.54 percent interest.
The PCC said its mergers and acquisitions office (MAO) “found the transaction unlikely to lead to substantial lessening of competition in provision of unsecured personal loans nationwide.”
“The MAO’s market investigation showed that post-transaction, there remain sufficient competitive constraints on the merged entity posed by numerous other competitors that offer loan products, particularly from both banks and non-bank financial institutions (NBFIs),” it said.
“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,” it added.
Bank of Ayudhya is partly-owned by Japan’s Mitsubishi UFJ Financial GroupInc. (MUFG).
The PCC noted that MUFG’s presence in the Philippines is through MUFG Bank Limited in Manila and through Acom Consumer Finance Corp. The latter is considered MUFG’s consumer loan arm, through which it offers the unsecured personal loans.
The Bank of Ayudhya-SB Finance deal is the 204th transaction approved by the PCC.
Under the recently issued PCC Memorandum Circular 20-003 in compliance with the Bayanihan to Recover as One Act (RA 11494), qualified M&A transactions entered into prior to the effectivity of RA 11494, including those transactions pending before the PCC for review are still subject to compulsory notification and review in accordance with Section 17 of the Philippine Competition Act and existing rules.