Moody's affirms Banco de Oro, may upgrade Equitable-PCI Bank

Moody's Investors Service said it affirmed Banco de Oro Universal Bank's D financial strength rating with a stable outlook and placed Equitable-PCI Bank's D- rating on review for possible upgrade. The Philippines-based banks' Ba3 debt ratings and B1 deposit ratings were affirmed with stable outlooks.

These actions follow the recent announcements of a merger between the two banks with Banco de Oro as the surviving entity. The merged bank will be renamed Banco de Oro-EPCI Inc.

The agency said Banco de Oro will benefit from Equitable-PCI Bank's expanded distribution network and wider product range and the merger will create the Philippines' second-largest bank by assets with 12% market share in both the deposits and loans markets.

However, Moody's noted that the merger will result in short-term asset quality deterioration relative to Banco de Oro's current financial profile and in the longer term, merger-related integration may prove challenging.

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