Union Bank of the Philippines (UnionBank) aims to complete the integration of UnionDigital Bank into the parent bank by April 2027, and has asked the Bangko Sentral ng Pilipinas (BSP) for capital relief to ease the process, Philstar reported.
UnionBank made the request in a disclosure to the Philippine Stock Exchange. It asked for an exemption from injecting more capital into UnionDigital.
The bank pointed to the planned integration as the reason. It said a capital infusion “will no longer serve its intended prudential objective” and would only lead to unnecessary capital movements.
UnionBank also asked the BSP to stop deducting its equity investment in UnionDigital when calculating its regulatory capital ratios.
These ratios compare a bank’s capital against risk-weighted assets such as loans.
UnionBank argued that continuing the deduction would not reflect the economic substance of the integration.
Both requests remain subject to BSP approval.
April 2027 for UnionDigital, November for UBX
UnionBank will absorb UnionDigital through a business transfer agreement, buying certain assets and assuming certain liabilities of the digital bank.
The deal is targeted for completion by April 2027.
UBX will transfer selected assets to UnionBank in a separate transaction, expected to close by the end of November.
Both transactions need clearance from the BSP, the Philippine Competition Commission, the Securities and Exchange Commission and the Department of Labor and Employment, Manila Bulletin noted.
No Disruption for UnionDigital Users for Now
UnionBank has said UnionDigital customers can keep using their accounts, deposits, loans and app without interruption during the transition.
The bank announced the integration plan last month and has since cut jobs at both subsidiaries.
UnionBank owns virtually all of UnionDigital, which offers digital deposits, loans and payment services and has PHP 9.8 billion in paid-up capital.
UBX has PHP 480 million in paid-up capital. UnionBank owns 83.33% of the fintech unit, and SBI Ventures Asset holds the remaining 16.67%.
Featured image: Edited by Fintech News Philippines based on an image by Union Bank of the Philippines via LinkedIn.
