The commercial banking unit of Mitsubishi UFJ Financial Group (MUFG) has recently secured the green light from Bangko Sentral ng Pilipinas, the central bank of the Philippines, for its 20% equity investment in Security Bank Corporation in a deal valued at PHP36.943 billion (US$794 million).

The MUFG's investment is the largest by a foreign entity in a Philippine financial institution and it is aimed to get involved in infrastructure projects in the country.

The partnership, which will also allow Security Bank to leverage on the BTMU’s extensive relationship with Japanese corporates, global network and expertise, will raise PHP36.9 billion in capital for the Philippine lender, increasing its shareholder capital from PHP52.4 billion as of September to PHP89.3 billion on a pro-forma post-transaction basis.

The bank seeks to double its current market share in both loans and deposits to between 8-9% from the current 4% range. 

As of end-September, Security Bank was ranked the sixth largest domestic universal lender with total assets of PHP482 billion (US$10.35 billion).

Go Watanabe CEO of BTMU Asia & Oceania region, said:

“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. 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. 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."

Security Bank President Alfonso L. Salcedo, Jr, added:

“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.”