World's largest bank to invest in RP thrift bank

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Would this be a good signal for investors?

[SIZE=2]World's largest bank to invest in RP thrift bank[/SIZE]

10/28/2008 | 03:59 PM

MANILA, Philippines - The world's largest bank is looking at the Philippines as a potential expansion site through a partnership with a state-run financial instutition.

The Industrial Commercial Bank of China has "indicated its desire to invest in the Philippines," Trade and Industry Secretary Peter B Favila said in a press briefing on Tuesday.

ICBC wants to invest in GSIS Family Bank, a subsidiary of the Government Service Insurance System (GSIS), through a capital infusion.

In a statement, GSIS said that while the terms of the investment have yet to be finalized, the partnership is expected to be forged within a year. The capital boost will allow GSIS Family Bank to upgrade its status to a commercial bank from a thrift bank. If granted a commercial bank license, ICBC through GSIS Family Bank will be able to run foreign currency deposit units, trust and quasi-banking functions.

GSIS earlier expressed its intent to sell 42 percent of its 99.55 percent stake in GSIS Family Bank.

"The investment of ICBC will not only provide the GFB with a very strong financial base, but also signify ICBC's confidence in the Philippine banking and financial system, as well as the whole economy," GSIS president and general manager Winston F Garcia said.

The ICBC is already seeking incentives from the Bangko Sentral ng Pilipinas for its entry as a third-party investor in GSIS Family Bank.

The Chinese bank wants to open 20 additional GSIS Family Bank branches and relocate 12 of its existing 22 branches nationwide.

Aside from being the world's largest bank in terms of maket value, ICBC is also on the world's top ten banks in terms of assets. Its total assets as of 2006 stood at $893 billion. Its market capitalization as of July 2007 stood at $254 billion, and it runs 18,000 brances, including 106 overseas outlets.

GSIS Family Bank, on the other hand, resulted from the union of several small banks, including Com-Savings Bank and Royal Savings Bank with branches mostly in Cavite, Lguna and Rizal.
Finance Secretary Margarito B Teves is hopeful the ICBC-GSIS Family Bank partnership proceeds to further boost the image of the Philippine banking system amid the global financial crunch.
"This will serve as a magnet for other investors to come in," Teves added.- GMANews.TV

http://www.gmanews.tv/story/129880/W...RP-thrift-bank