By Eileen A. Mencias

East West Banking Corp., the banking unit of the Gotianun family, yesterday paid $45 million to American Insurance Group for the acquisition of AIG Philam Savings Bank and two other AIG companies after receiving the go-signal from the Bangko Sentral.

East West Bank president Antonio Moncupa Jr. said in a phone interview that the Monetary Board approved the bank? plan to merge AIG Philam Savings Bank and two other companies?Philam Auto Finance and Leasing Inc. and PFL Holdings Inc. The Bangko Sentral relayed the board approval in a letter last week, he said.

East West Bank originally bid $48.5 million for the purchase of the three companies before AIG agreed to reduce the price to $45 million due to adjustments.

Central bank sources said regulators had asked Philam Savings Bank, which bought Primus Leasing from Ford Motors early last year, to divest itself from the leasing and holdings companies. The banking law prohibits a thrift bank from going into non-allied businesses.

Philam Savings later renamed Primus Leasing as Philam Auto Finance.

East West Bank?s acquisition of Phil Savings, however, rendered the divestment requirement academic. Moncupa said East West Bank as a commercial bank can go into non-allied businesses.

East West Bank had planned to double its income this year. The acquisition of the savings bank is now expected to make the goal more realistic.

The purchase 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 acquisition will also increase East West Bank?s branches to 89 from 80.

East West Bank, which registered a net income of P375 million in 2008, aims to increase its profit to P700 million this year and to P1 billion by 2010, when assets would have risen to P100 billion.

Filinvest Development Corp., the majority owner of the bank, plans to inject an additional P2 billion in tier 1 capital into the bank in preparation for its conversion into a universal bank.

East West Bank has excess capital and retained earnings even without the tier 1 capital infusion.

The tier 1 infusion in East West Bank is expected to strengthen the bank?s capital-risk ratio, which stands at 14 percent, well above the regulatory requirement of 10 percent.

The infusion of tier 1 capital will give the bank elbow room in the future to raise tier 2 capital.

AIG bid out the savings bank in January to raise revenues and pay its debt from the US Fed. The beleaguered AIG, however, cancelled the sale of Philippine American Life Insurance Co. last week.