TPG-backed buy now, pay later (BNPL) platform BillEase is entering the Philippine banking arena following its acquisition of a single-unit rural bank in northern Philippines.
The company announced on Thursday that it had completed the purchase of Rural Bank of Sta. Maria (Ilocos Sur) Inc., giving the fintech a direct path into deposit-taking, a critical step as it scales its lending business. In June this year, DealStreetAsia first reported that the fintech startup was looking to enter the banking space.
BillEase did not disclose financial details of the transaction, saying only that it used “a portion” of its equity to fund the acquisition. Founded 56 years ago, Rural Bank of Sta. Maria operates a single branch in Ilocos Sur, around 370 km north of Manila.
As per the latest Bangko Sentral ng Pilipinas (BSP) data, the rural bank holds a deposit base of 38 million pesos ($640,000) and a loan book of about 12 million pesos ($200,000).
While the bank’s size is small relative to BillEase’s 10-billion-peso loan book currently, the deal hands the fintech something it has long sought: a banking licence.
With the acquisition, BillEase joins a growing roster of digital-centric fintech players in the Philippines that have bought smaller banks to facilitate entry into regulated banking. Sea Limited’s SeaBank (now Maribank), Akulaku-backed OwnBank, and most recently IFC-backed Salmon all followed this “buy-a-bank” path to secure licences, allowing them to accept deposits nationwide while maintaining lean, app-based operations.
A path to cheaper capital
Rural banks are the country’s smallest regulated banking institutions, historically established to serve provincial and agricultural communities. As of October this year, there are 386 rural banks across the Philippines, according to central bank data. By contrast, there are only 44 universal and commercial banks, institutions that collectively hold more than 90% of the country’s total deposit base.
In an earlier interview with DealStreetAsia, BillEase co-founder and CEO Georg Steiger said the ability to accept deposits will further diversify its funding sources, and strengthen the loan portfolio of the fintech.
Steiger said they are looking to end the year with a loan book of about 11 billion pesos. Launched in 2017, BillEase said it has so far served over 10 million customers and disbursed more than 100 billion pesos in loans in its eight-year history.
Earlier this year in May, BillEase secured a 5-billion-peso ($90 million) syndicated corporate notes facility arranged by Security Bank Capital Investment Corporation, the investment arm of local lender Security Bank. This followed a September 2024 Series C equity round, led by TPG’s The Rise Fund, with participation from existing investor Burda Principal Investments, which had also led its Series B round.
BillEase expects to integrate full banking features into its app by the third quarter of next year. Steiger told DealStreetAsia that the company aims to fund one-third to half of its loan book with deposits by 2027. At present, all lending is financed through equity and existing loan facilities.
The CEO also told this publication that the acquisition was set in motion two years ago, before the moratorium for new digital bank licenses was lifted by the central bank. Even then, Steiger said they still would opt for this buy and scale route instead of applying for the digital banking licence.
“We don’t want to be locked into digital only,” he said. “There’s a segment of customers that feel safer knowing they can go to a branch. Finance is all about trust, especially when you ask people to deposit money with you.”
Steiger said the company is now studying whether to eventually expand its physical presence. While no timeline has been set, Steiger said that having the option to build out a branch network could become a strategic differentiator.
IPO still a distant prospect
While the banking licence marks a new chapter for BillEase, Steiger said it does not yet bring the company significantly closer to an initial public offering.
Rural Bank of Sta. Maria’s current 37 million pesos in deposits, which now become BillEase’s deposit base, “needs to be much much larger,” he said. The company plans to offer deposits at high interest rates to lure consumers in. Although they have not disclosed their planned interest rates, they said it would be “highly competitive”.
At present, the highest deposit rate offered by a digital bank in the market is 15% per annum, subject to certain qualifications.
BillEase plans to apply for an advanced electronic payments licence next year. Once approved and fully launched, the company expects a 6-12 month ramp-up period to scale deposit acquisition, Steiger said.
For now, however, the company believes it has ample capital headroom. “It’s really too early,” Steiger said when asked about an IPO road map. “We have more than enough capital. It’s definitely one of the options we look at, but it’s early.”
He added that potential IPO activity in the Philippines may hinge on how market leaders perform. “I think everyone will look at how GCash works out. If they have a strong IPO, it could open the market for everyone.”
