Major Philippine banks may seek expansion through acquisitions

Takeover of  smaller banks could take place as banks go for competitive edge.

The biggest Philippine banks may seek acquisitions to expand, providing a catalyst for the benchmark stock index to “test” new highs, said Philequity Management Inc., manager of the nation’s second-best-performing fund.

The Philippine Stock Exchange Index may rise to 3,873.50 in the next 12 months, a 10 percent gain from the close on Aug. 6, said Jerome Gonzalez, a portfolio manager at Philequity who runs a 2.1 billion pesos ($48 million) stocks fund that has climbed 19 percent in the past five years. The fund makes up the bulk of the 2.5 billion pesos ($55.67 million) of assets managed by Philequity.

“The banking sector could provide the trigger for the stock market’s next leg-up and test its historical high,” Gonzalez said in a phone interview on Monday. “Some mergers and acquisitions could take place as banks try to stay competitive.”

Gonzalez is expecting more acquisitions as billionaire Lucio Tan’s Philippine National Bank cleared a regulatory hurdle last month to merge with Allied Banking Corp., which he also owns. Philippine National had surged 70 percent this year as of Aug. 6, more than four times the 15 percent gain in the benchmark index.

View the full story in Bloomberg.