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January 23, 2009

AIG sheds some Philippine assets for $42m

American International Group (AIG.N) will sell its consumer banking and car financing companies in the Philippines to a local bank for about 2 billion pesos ($42 million), Reuters quoted sources as saying Thursday.

AIG is slated to sign an agreement on Friday with East West Bank, a mid-sized lender owned by businessman Andrew Gotianun, for the sale of the local units, according to sources with knowledge of the deal. The sources spoke on condition of anonymity because the deal has not been publicly announced.

AIG's consumer banking arm, Philam Savings Bank, has said it will hold a news conference at 0200 GMT on Friday to announce the sale of the assets, but has not named a buyer.

The assets are a small part of the US insurer's local unit, Philippine American Life and General Insurance Co (Philamlife). The Philamlife group, with total assets of 170 billion pesos as of end-2007, is being sold by AIG as part of its global fund-raising to pay off billions of dollars in debts to the US government.

The remaining Philippine assets, including the Philamlife insurance business, are likely to be sold in one piece, the sources said.

According to industry estimates, the acquisition price of the consumer bank and car finance firm represents a 25 percent premium on the combined 1.6 billion pesos book value.

Philam Savings is valued at 1.3 billion pesos with auto financing firm Primus Finance and Leasing at 300 million pesos, according to the estimates.

East West Bank's takeover of Philam Savings would boost its assets to about 69 billion pesos from around 42 billion pesos.

Deutsche Bank is advising AIG on the sale of the Philippine assets.

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