By Jenniffer B. Austria

The Philippine Stock Exchange has issued a show cause order against Filinvest Development Corp., the holding company of the Gotianun family, for its failure to disclose the recent acquisition of Philam Savings Bank.

The PSE directed Filinvest to explain within 24 hours why it should not be penalized.

The stock exchange said Filinvest announced that its banking unit, East West Banking Corp., acquired Philam Savings Bank, the local consumer banking arm of American Insurance Group Inc., without making a disclosure to the stock exchange.

?It was only after the exchange requested for clarification of the said news that the corporation made a disclosure in violation of the revised disclosure rules of the PSE,? the exchange said.

East West Bank earlier entered into a share purchase agreement for the acquisition of all the shares of AIG Philam Savings Bank, Philam Auto Finance and Leasing and PFL Holdings Inc.

?The acquisition of AIG Philam Savings Bank and two related companies will lead to the expansion of East West Bank?s retail banking business and support East West Bank?s intention to become a more significant player in the industry,? the bank earlier said.

The bank expects to close the transaction by the second quarter of the year.

Meanwhile, Filinvest said its board approved the investment of up to P1.2 billion to subscribe to 120 million preferred shares of East West Bank.

?The preferred shares will constitute tier 1 capital of the bank and are perpetual, non-cumulative, non-voting and convertible to common shares at the stockholders? option,? Filinvest said.

Filinvest?s wholly-owned subsidiary, FDC Forex, will also invest up to P800 million to subscribe to 80 million shares of East West Bank.

East West Bank is a subsidiary of Filinvest group, one of the country?s premier conglomerates with business interests in real estate development and leasing, financial services and sugar business.

East West Bank has a network of 80 branches, 48 in Metro Manila and 32 in the provincial areas.

The bank?s total assets totaled P49.9 billion as of end-December 2008,while deposits reached P39.4 billion.

Philam Savings Bank offers credit cards, auto loans, deposits, priority banking and trust. It has nine branches, six in Metro Manila and three in the provinces.