PSE Circular for Brokers No. 2693-99

October 21, 1999 PSE CIRCULAR FOR BROKERS NO. 2693-99 Philippine Stock Exchange PSE Center, Exchange Road Ortigas Center, Pasig City Attention: Ms . Grace B . De Guia Asst . Manager, Disclosure Dept . Gentlemen: Please be informed that in a special meeting of the Board of Directors of Far East Bank and Trust Company this afternoon, the Board unanimously approved the proposal to merge Far East Bank and Trust Company with and into the Bank of the Philippines, subject to obtaining the approvals of the shareholders of the two banks and regulatory agencies. We transmit herewith the Banks' official statement on the matter. Very truly yours, (SGD.) ANGELITA L. ORTEGA-CORTEZ First Vice President and Corporate Secretary BANK OF THE PHILIPPINE ISLANDS AND FAR EAST BANK TO MERGE MANILA - Bank of the Philippine Islands (BPI) and Far East Bank and Trust Company (FEBTC) today jointly announced a merger of equals in a stock-for-stock transaction that will create the largest bank in the Philippines by all measurements-assets, loans, deposits and capital. The merger will establish a company that will have on a pro-forma basis, P352 billion in assets, P50 billion in capital funds and P148 billion in funds managed. Based on the closing price of BPI on October 20, 1999 of P118 per share, the merged entity would have a combined market capitalization of P150 billion, making it the largest company listed on the Philippine Stock Exchange and among the top banks in South East Asia by market capitalization. LibLex Under the terms of a definitive merger agreement approved by the Board of Directors of both companies, and signed today by BPI represented by Mr. Jaime Zobel de Ayala, Chairman of the Board and Mr. Xavier Loinaz, President, and FEBTC represented by Mr. Jose Cuisia, Chairman and Mr. Octavio Espiritu, President, each share of common stock of FEBTC will be converted into 0.6992 shares of common stock of BPI. Based on the closing price of BPI on October 20, 1999, the exchange ratio represents a 29.6% premium to the average price of FEBTC over the last one month. On the basis of the exchange ratio, BPI's shareholders will own two-thirds of the combined bank and FEBTC's shareholders one-third. Upon completion of the merger, the company's name will be Bank of the Philippine Islands with the trust business operated under a separate subsidiary named Far East Trust Company. Mr. Zobel said, "We are convinced that the proposed combination will bring great value to both institutions and to all our combined stakeholders. We believe the power of this combination offers an exciting vision for our future. The combination will create the dominants premier financial institution in the Philippines. The combined entity will be able to capitalize on its size and business strength to capture even greater market share and improve profitability." For his part, Mr. Loinaz, has stated that "I know of no other financial institution aside from FEBTC that more closely matches our own drive for success and our own mission to continuously create superior value for our owners, customers and employees. By sharing successful best practices across our two companies, we can take advantage of the unique strengths of both organizations to serve our customers better and deliver even greater shareholder value. This merger will result in a dynamic new organization that is geographically diverse and focused on delivering long term benefits for our stockholders, customers, and communities served." LibLex Mr. Cuisia said, "The combined bank will be the leading bank in the Philippines with a strong capital base and the leading market position to capitalize on growth in the Philippines. This merger will bring together two high performing companies with complementary businesses, products, technology; markets and customers." Mr. Espiritu said, "This merger brings together two outstanding organizations that share common values, compatible strategies and demonstrated track records of achievement. BPI has an exceptionally strong consumer and corporate franchise while FEBTC has the leading franchise in trust business as well as in the middle market and corporate segments." The merger is expected to result in significant synergies for the combined entity, with benefits coming both from revenue enhancements and cost reductions. The merged bank's joint and expanded operations for Japanese clientele will continue to be supported by a team nominated by Sakura Bank of Japan, who will become a strategic shareholder of BPI after the merger. The combined bank will be the dominant Philippine bank serving Japanese corporate clients. The merger is subject to regulatory and stockholder approvals. BPI is currently the third largest bank in the Philippines in terms of assets. It was established in 1851 and is the oldest bank in Southeast Asia. As of June 30, 1999, Bank of the Philippine Islands had total assets of P218 billion and capital funds of P30 billion. BPI has the most extensive branch network in the country with 426 branches combined with BPI Family Bank. Further information about BPI's financial results and its products can be accessed on the Internet at [http://www.bpi.ph.com]. FEBTC was established in 1960 and is currently the fifth largest bank in the Philippines in terms of assets. As of June 30, 1999, FEBTC had total assets of P135 billion and capital funds of P19 billion. It has the sixth largest branch network in the Philippines with 260 branches. Further information about FEBTC's financial results and products can be accessed on the Internet at: [http://www.febtc.com]. FEBTC was advised on the merger by Goldman Sachs and BPI was advised by J. P. Morgan and BPI Capital Corporation. For further information, please contact: Bank of the Philippine Islands: Xavier Loinaz (63-2) 816-9397 Far East Bank and Trust Company: Octavio V. Espiritu (63-2) 891-4000