China Bank raising P20 B in return to debt market

MANILA, Philippines – China Banking Corp. is raising up to P20 billion from the issuance of long-term negotiable certificates of time deposits (LTNCD) to support its strategic initiatives and business expansion.

The bank plans to return to the debt market after an eight-year hiatus through the issuance of LTNCDs in tranches of P5 to P10 billion each, with tenors ranging from five to seven years.

“The timing will be subject to regulatory approvals and tranche issue size and implementation will depend on prevailing market conditions,” China Bank said.

The bank, majority owned by retail and banking magnate Henry Sy, is set to tap existing clients and depositors for the LTNCD.

LTNCDs are time deposits that have longer maturity and are higher yielding than regular deposits. These instruments are negotiable and insured with the Philippine Deposit Insurance Corp. (PDIC) up to a maximum coverage of P500,000 per depositor.

China Bank entered the LTNCD market in 2008 when it successfully offered its five-year P5 billion LTNCDs.

For this latest offering, the bank’s Management Committee was granted authority by the board of directors to appoint the arranger/s and required third parties and approve commercial terms of the issue.

This issuance is expected to expand China Bank’s long-term deposit base and boost its long-term asset growth.

Data from the BSP showed China Bank is the country’s eighth largest bank in terms of assets with P470.32 billion as of end-March. It is also ranked eighth in terms of capital with P55.96 billion.

Earnings of China Bank jumped 30.3 percent to P3.27 billion in the first half of the year from P2.51 billion in the same period last year on the back of the strong growth in its core and fee-based businesses.

It continued its network expansion and embarked on new product initiatives resulting in an 11 percent rise in total operating expenses to P6.66 billion in end-June.

Together with its thrift bank arm China Bank Savings, China Bank has a network of over 500 branches nationwide after opening seven branches in the first half of the year.