By Eileen A. Mencias

East West Banking Corp., the banking unit of the Gotianun family, is beefing up its capital in preparation to obtaining a universal bank license and becoming among the country’s 10 largest banks.

East West Bank yesterday signed an agreement to purchase AIG Philam Savings Bank, Philam Auto Finance and Leasing Inc. and PFL Holdings Inc., three subsidiaries of the beleaguered AIG group.

AIG and East West Bank declined to value the transaction but a source familiar with the transaction earlier estimated the deal at P2 billion, or at a 25 percent premium over the book value of the three AIG units.

East West Bank president Antonio Moncupa Jr. said the bank was getting an additional P2 billion in tier 1 capital infusion from shareholders, mainly Filinvest Development Corp., the flagship company of the Gotianun family.

He said the bank capital infusion was part of an earlier plan to upgrade the bank into a universal bank and propel it into the top 10 in the industry to “make it into a more relevant participant in the banking industry.”

“The increase in capital was planned well ahead of this transaction,” East West Bank chairman Jonathan Gotianun said.

East West Bank, prior to the acquisition, was the country’s 20th largest bank in terms of assets and the 14th largest by equity.

The purchase of AIG Philam Savings Bank will increase East West Bank’s assets to P63 billion, double its auto loan receivables to P8 billion and make it the sixth largest credit card issuer in the country. The purchase will also raise East West Bank’s branches to 89 from 80.

“This transaction should add fuel to the growth momentum of East West. In the last two years, we registered a compounded annual growth rate of 28.4 percent,” Moncupa said.

The bank registered a net income of P375 million in 2008 and aims to nearly double it to P700 million this year and P1 billion by 2010. It plans to build its assets to P100 billion by 2010.

“These targets were set even before we considered acquiring AIG Philam Savings. With the solid business base that AIG Philam Savings brings and more importantly, the pool of talented professionals that will help East West, we have to review these targets and move it upwards,” Moncupa said.

AIG regional executive in charge of consumer finance Sabby Ray, meanwhile, said the group “started the process of divesting and this is the first in a series of similar divestments that will happen in the next few months.”