Rural banks consolidate into GM Bank of Luzon

Rural banks consolidate into GM Bank of Luzon

RURAL BANKS GM Bank, Inc. and Bangko Luzon, Inc. have consolidated to form a new rural bank to make operations more efficient and reach more clients.
The Bangko Sentral ng Pilipinas (BSP) said in Circular Letter No. 006 dated January 18, 2011 that the Securities and Exchange Commission had given the greenlight for the articles of consolidation of GM Bank and Bangko Luzon on November 9.

“Effective 1 December 2010, the banking activities and transactions of GM Bank, Inc. and Bangko Luzon, Inc have been consolidated under the corporate name GM Bank of Luzon, Inc.,” the central bank said in the circular letter.

In a telephone interview yesterday, Tomas S. Gomez IV, president and chief executive officer of GM Bank of Luzon, said the banks consolidated to form a new bank to make their operations more efficient and to expand their reach.

Mr. Gomez was GM Bank’s president and chief executive officer.

Bangko Luzon was GM Bank’s affiliate bank before the consolidation, according to the GM Bank website. The former was based in San Isidro, Nueva Ecija while the latter was based in Cabanatuan, Nueva Ecija.

GM Bank was itself the consolidation of two Nueva Ecija-based banks, Community Rural Bank Inc. and the Muñoz Rural Bank Inc.

“[The consolidation] was done for better operational efficiencies. The banks have common shareholders so we felt we would be able to generate better economies of scale by having one entity,” Mr. Gomez said.

“The controlling shareholder of the banks is the same that’s why we decided to go together,” he also said.

He declined to identify the controlling shareholder.

Mr. Gomez said the consolidation of the banks has created 32 branches for the GM Bank of Luzon, with 25 coming from GM Bank and seven from Bangko Luzon.

He said the bank plans to increase its presence by opening five new branches this year.

Three branches, he said, will be located in Pangasinan, while two will be opened in Nueva Vizcaya.

“We would also like to increase our portfolio in agriculture lending, SME (small, micro and medium) loans and microfinance,” he said.

The bank, he said, is also looking at starting a consumer loan portfolio since most of its business is focused on financing individuals setting up their own businesses.

The BSP is encouraging rural banks to merge and consolidate to form stronger institutions. The government has set-up a P5 billion fund to spur mergers and consolidation in the rural banking industry. -- Louella D. Desiderio

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