Via ODiSy March 22, 2012 PHILIPPINE STOCK EXCHANGE ... - BDO

- 119 -In compliance with the requirements of the General Banking Act relative to the Bank'strust functions:(a) Investment in government securities (shown as part of Held-to-maturity Investments)with a total face value of P7,043 and P5,887 as of December 31, 2011 and 2010,respectively, in BDO Unibank Group and P5,939 and P4,791 as of December 31, 2011and 2010, respectively, in the Parent Bank are deposited with the BSP as security for theBank's faithful compliance with its fiduciary obligations; and, A certain percentage ofthe trust income is transferred to surplus reserve. This yearly transfer is required untilthe surplus reserve for trust function is equivalent to 20% of the BDO UnibankGroup’s authorized capital stock. As of December 31, 2011 and 2010, the reserve fortrust functions amounted to P106 and P89, respectively, and is included as part ofSurplus Reserves in BDO Unibank Group equity.Income from trust operations, shown as Trust Fees under Other Operating Income,amounted to P1,727, P1,474, and P1,218, for the years ended December 31, 2011, 2010and 2009, respectively, in the BDO Unibank Group statements of income and P1,489,P1,273 and P1,089 for the years ended December 31, 2011, 2010 and 2009, respectively,in the Parent Bank statements of income.26. MERGERS AND ACQUISITIONS26.01 Mergers Among SubsidiariesAs discussed in Note 13.01, the Parent Bank approved the five-way merger ofwholly-owned subsidiaries: BDOSHI, ECN, ESHC, BDO Technology, and SPHI, withBDOSHI as the surviving corporation. The Merger was accounted for using thepooling-of-interests method since the merging entities are under the common control ofthe BDO Unibank Group (see Note 13.01.02).26.02 Acquisition of GE Money BankIn May 2009, the Parent Bank and GE Capital, a financial services unit of the GeneralElectric Company, announced the signing of a definitive agreement to transfer GEMBin the Philippines into the Parent Bank. As part of the agreement, GE Capital will alsomake an investment in the Parent Bank by acquiring a stake of approximately 1.5%.The transaction consolidated GEMB’s business into the Parent Bank, including 30,000customers, 350 employees, a network of 31 branch licenses and 38 ATMs nationwide.On August 24, 2009, the Parent Bank completed the purchase of 98.81% of the issuedand outstanding common stock and 100% of the preferred stock of GEMB for aconsideration of P2,000.The agreed price for the net assets of GEMB at the closing date amounted to P1,500.Hence, the Parent Bank recognized goodwill of P500 representing the excess ofpurchase price over the fair value of GEMB’s net assets. The goodwill is included inthe Other Resources account in the statement of financial position. The acquisition wasapproved by the BOD and by the BSP on May 27, 2009 and July 30, 2009, respectively.On August 12, 2010, GEMB amended its Articles of Incorporation and adopted thename BDO Elite Savings Bank, Inc.