Bank of Tokyo-Mitsubishi and Security Bank

Moreno III, Rufino Gerard G.

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Bank of Tokyo-Mitsubishi and Security Bank

Japan’s largest bank, Bank of Tokyo-Mitsubishi, agreed to buy 20 percent of Security Bank Corp. for $782 million, or P36.9 billion. The transaction by far is the largest equity investment in the country’s financial system by a foreign institution. It topped the Philippine investment of Cathay Life Insurance Corp. of Taiwan, which infused P17.9 billion for a 20-percent stake in Rizal Commercial Banking Corp.

According to news reports, Bank of Tokyo-Mitsubishi has been focusing on Asia as one of its core markets for growth and is looking for the right partner in higher growth markets like the Philippines to establish presence. They were looking to establish a comprehensive financial service platform that will include retail banking service for its clients’ needs in the Philippines.

So why did a large bank with international presence opted to choose Security Bank?

By using the investment from Bank of Tokyo-Mitsubishi, Security Bank will now be able to speed up the growth of its branch network to support retail, middle market and SME penetration, and grow low-cost funding base. And they are looking at establishing some 500 to 600 branches by 2020 in deposit-rich, high-business markets.

The investment will also allow Security Bank to upgrade its information technology systems to provide better customer service experience and expand their profits from retail banking, wholesale banking and financial markets.

The investment deal will position Security Bank as one of the big banks of the Philippines and will be better poised to support the growth of the Philippines’ economy with the resources and capabilities sufficient to compete against larger financial institutions. 

Maybe Bank of Tokyo-Mitsubishi saw Security Bank as a bargain. It saw Security Bank’s potential to grow like the top banks of the country BDO, BPI METROBANK etc. As Security Bank grows, their investment also grows.

And it is of my opinion that this deal between Security Bank and Bank of Tokyo-Mitsubishi is a win-win for both parties.