MANILA, MAY 1, 2008
(STAR) By Ma. Elisa P. Osorio - The Philippines is seeking to enter Japan’s $48-billion software industry as demand for locally made electronics products in the US continues to slow down.

The US is the country’s largest export market of electronics. But because of the the recession, demand has greatly suffered, hampering the growth of the industry.

Studies made by the Department of Trade and Industry (DTI) showed that Japan’s IT industry is expected to reach 5.5 trillion yen or $48 billion by 2010.

To prepare, eight local firms will join the 17th Software Development Expo and Conference (SODEC) at the Tokyo Big Sight in May. These are: Advanced World Systems Inc.; Alliance Software Inc.; Astra (Philippines) Inc; Ayala Systems Technology Inc.; Imperium Technology Inc.; N-PAX Cebu Corp; Tsukiden Software Philippines Group; and WeServe Systems International Inc.

SODEC is recognized as one of the most important trade exhibitions for software development engineers and designers in Japan. This year, it will feature 1,800 exhibitors and is expected to generate 125, 000 trade visitors.

Participating firm Alliance Software is confident that the participation will boost the market share of local firms.

“Japan is the world’s second largest economy and the leader in technological innovation. It will always be part of Japan’s pursuit for innovation and economic growth,” said Robert Cheng, president of Alliance Software.

The company will bring their application development outsourcing services in Japan specifically open source development technologies and wireless/mobile applications.

“What Filipino software companies can offer to the Japanese software sector is reliable partnership with strong adherence to quality, cost effectiveness, language skills, and high technological competence,” Chang said. 

“Japanese companies know that IT outsourcing is not just about cutting cost but also a strategy that can help companies push their innovation strategies,” he added.

In fact, some of the Japanese companies already resort to local IT firms for critical IT solutions like ATM system management and other banking and finance functions. Industry statistics show that there are 4,500 Filipino software engineers servicing the Japanese market.

Some of the major Japanese companies in IT outsourcing that are in the Philippines are Fujitsu, Canon, Epson, Denso Techno, System Yoshiii, and NEC Telecom among others.

PNB acquires Allied Bank via P25-B share swap By Des Ferriols Thursday, May 1, 2008

After months of speculation, the Lucio Tan Group announced yesterday that the Philippine National Bank (PNB) is finally buying out 100 percent of Allied Banking Corp. (ABC) through a P25-billion share swap.

The transaction was approved by the board of directors of both banks with PNB as the surviving entity likely to be headed by PNB president and chief executive officer Omar Byron Mier.

In a press conference, Mier said PNB is buying Allied Bank through a share swap where PNB plans to issue 457 million new shares at P55 per share for a total of P25 billion.

According to Mier, PNB would issue 140 shares for every common share of ABC and 30.73 shares for every preferred Allied Bank share to shareholders of ABC.

Mier said the merger agreement would be presented to the stockholders of both banks on June 24 this year and when approved, the new entity would become the country’s fourth largest bank with a combined total asset of P388 billion.

Once the transaction is approved by stockholders, Mier said the Lucio Tan Group would own 80.7 percent and the balance would be owned by the minority shareholders of ABC and PNB.

ABC president Reynaldo Maclang said the boards of directors of PNB and ABC have nominated Mier to head the new entity as president and CEO although he said the full organizational impact was still unclear.

After the merger, Mier said PNB would boast a combined distribution network of 626 branches and 614 nationwide, making it the third largest private domestic bank in terms of branches.

“In addition, we will have the largest international footprint across the AsiaPacific region, Europe, the Middle East and North America,” Mier said. PNB would then have a total of 124 foreign offices, branches and subsidiaries abroad.

Mier said the combined capabilities of PNB and Allied Bank would bring down the bank’s cost of funds to as low as 2.5 percent, way below the industry average of about three percent.

“In about three to five years, we would have realized a combined cost savings of 10 to 12 percent,” Mier said, adding that PNB’s capital adequacy ratio would also improve to 19 to 20 percent.

“This will be, if not the highest, one of the highest CAR in the industry,” he said. He said the CAR already factored in the issuance of lower Tier 2 capital by both PNB (P3 billion) and AB (P4.5 billion) this year.

The merger would affect over 9,000 employees of both banks but Mier said the resulting retrenchment was not likely to be significant since the individual businesses of the two banks did not overlap.

Mier said PNB and Allied Bank have formed a review committee that would take up the integration plan in the next two months but said that typical mergers shed about 20 percent of the total workforce.

“We’ve initially identified 10 to 15 locations where we are both located, for example,” he said. “We are not giving up any of our branches, we will just relocate them. We don’t know what the numbers are right now.”

Mier said the merger of the two banks would significantly improve PNB’s portfolio with its non-performing ratio expected to go down to single-digit levels within the next two years.

However, Mier ruled out the possibility of any more acquisition for PNB, saying that it would take at least three to five years for the bank to digest the integration process with ABC.

Initially, Mier said he expects the total cost of integration to reach between P1 and P1.2 billion that would impact on the bank’s bottom line in the next two years.

“Our income prospects are very fluid at the moment,” he said.

Since both banks were both undertaking their respective capital-raising efforts this year, Mier said PNB would have no further need to raise more capital after the completion of the merger.

“We’re fine, we wont need any more capital,” he said.

Mier said ABC would be adding businesses to PNB that it did not previously have, particularly its strong presence in the Filipino-Chinese business community.

“Our revenue mix will be spread out from our remittance business, the Filipino-Chinese business both for retail and corporate consumer business, government and government-related businesses where we are very strong, corporate lending and consumer loans,” he said.

Chief News Editor: Sol Jose Vanzi

All rights reserved