PSE Circular for Brokers No. 1939-99

August 5, 1999 PSE CIRCULAR FOR BROKERS NO. 1939-99 August 4, 1999 Securities & Exchange Commission Director Linda A. Daoang Money Market Department S.E.C. Building EDSA Mandaluyong City Philippine Stock Exchange Disclosure Department Listing and Disclosure Group 4/F PSE Center Exchange Road Ortigas Center, Pasig City Gentlemen : Please be informed that the Board of Directors of Ayala Insurance Holdings Corporation (AIHC), a 100% subsidiary of Ayala Corporation, approved today to pursue the plan of merger of AIHC's investments in the insurance business with the Bank of the Philippine Islands (BPI). Upon approval by the Bangko Sentral ng Pilipinas, the proposed merger will be presented to the stockholders of both companies. Ayala Insurance Holdings owns majority stakes in Ayala Life Assurance Incorporated, FGU Insurance Corporation and Universal Reinsurance Corporation. Ayala Life carries life insurance, education, pension plans and health care. FGU, a non-life insurance company, offers property, marine and casualty insurance. Universal Reinsurance Corporation is a professional reinsurance company offering protection for both life and non-life business. The Bank of the Philippine Islands is the third-largest universal bank in the country, with total assets of P218 Billion as of end-June 1999. The bank has consistently broken new ground with its banking innovations in product technology and service delivery. With its extensive branch network, the bank aims to tap savings potentials of the country by cross-selling bank and insurance-linked products. The move underscores BPI's strategy of prudently, growing within its core expertise of high quality and financial services. The proposed merger between BPI and AIHC will result in the first full integration of a bank and an insurance group in the country and in the region, an arrangement often referred to as "bancassurance." The new structure is expected to provide an excellent platform for growing markets like the Philippines. The combined operation should improve profitability in both its insurance and banking operations while enhancing the bank's position as one of the country's leading providers of financial services. Ayala Corporation will continue to be the major shareholder in BPI with an equity stake of 44%. This information is being submitted in compliance with the rules of the Securities and Exchange Commission and the Philippine Stock Exchange. Very truly yours, (SGD.) RENATO O. MARZAN Managing Director