Oriental Financial Group Inc. announced Wednesday plans for the integration of Banco Bilbao Vizcaya Argentaria Puerto Rico, which Oriental acquired in late December, and the combined companies’ branding and business strategy.
Early in the day, Oriental President José Rafael Fernández said the acquisition for $500 million in cash is a “milestone in Oriental’s long history of service, innovation and singular dedication to Puerto Rico.”
“Oriental is now the best capitalized, locally controlled bank, solely focused on serving the needs of Puerto Rico’s individuals and businesses,” he said. “That is why we have named our integration program ‘Juntos Somos Más,’ which in English means ‘Together We Are More’.”
Fernández said the combined companies, now under the Oriental name, are able to deliver banking and wealth management products and services to individuals and businesses throughout Puerto Rico.
“Oriental wants to help our clients achieve more and get more done,” he said. “With our sound financial structure and a dedicated team of more than 1,700 people, our mission is to help our clients, and the communities we serve, by building and retaining wealth for them and their future generations. In so doing, we will also benefit our supportive investors, who helped make this day possible.”
Leading market positions
In terms of size, Oriental Bank now holds leading market positions in Puerto Rico:
- Second largest branch network, with 64 financial centers covering all key markets on the island. Before the acquisition, Oriental Bank was ranked 7th with 28 financial centers.
- Third largest share of core retail and commercial deposits, with approximately $4.9 billion in balances, equal to 13 percent market share. Before, Oriental Bank was ranked 6th with a 5 percent share.
- Third largest in Puerto Rico assets, with approximately $9.3 billion. Previously, Oriental Bank was ranked 5th with $6 billion. Approximately 60 percent of Oriental Bank’s assets are now loans compared to 28 percent before.
In terms of products and services, officials said Oriental Bank is now a leader in:
- Auto loans and leases
- Commercial lending and banking for middle market and small businesses
- Residential mortgages
- Wealth management, including trust and retirement services
Merger results in ‘strong, market leading institution’
The acquisition of BBVA Puerto Rico’s operations completes the strategic initiative begun by Oriental in 2010 to transform itself by reducing its dependence on investment securities and wholesale funding, and expand its traditional commercial and consumer banking and wealth management services.
In connection with the acquisition, Oriental in December completed the planned deleveraging of approximately $1.3 billion on its balance sheet.
“In creating a strong, market leading institution, with a robust retail and commercial banking and financial services platform, the overarching goal is to improve Oriental’s prospects for growth, generate greater recurring revenue and income, expand the net interest margin, improve earnings stability and predictability and, ultimately, enhance our market valuation,” said Fernández.
Oriental and BBVA PR’s franchises are highly complementary to each other, he said.
Together, they will provide Oriental with a strategic advantage in serving a market that desires personalized attention, unparalleled customer service, and access to a broad array of competitively priced banking and financial products and services, he noted.
While BBVA PR has substantial commercial banking and auto lending operations, and its management has significant retail and business banking experience, Oriental has substantial wealth management operations, and its management has significant retail and business trust and retirement planning experience.
“There is great synergy between Oriental and BBVA PR’s customer profiles,” he said.
Roadmap for integration
The first businesses to be combined are expected to be wealth management, residential mortgage, and auto loan and leasing. All lending, deposit and branch operations will be fully combined in the fourth quarter.
Meanwhile, to offer increased accessibility to transactional services, Oriental Bank and former BBVA PR branches will have access to each bank’s systems. As of Wednesday, Oriental was offering these services at seven branches, but will be expanding it to the rest of the network in coming months.
ATM service will be seamless as clients will instantly have access free-of-charge to an expanded network of more than 120 ATMs throughout Puerto Rico, Fernández said.