PSE clears BDO’s P60-B stock rights offer

MANILA, Philippines - BDO Unibank Inc. is set to kick off next month its P60-billion stock rights after receiving the green light from the Philippine Stock Exchange (PSE).

The PSE approved Wednesday the planned stock rights offering of the country’s largest bank, owned by retail and banking magnate Henry Sy, paving the way for the start of the fund-raising activity.

The Bangko Sentral ng Pilipinas (BSP) had already given last Nov. 23 its clearance for the stock rights offering.

BDO plans to offer approximately 800 million shares wherein existing shareholders could avail of one right for every five shares owned.

Offer period starts on Jan 16 and ends on Jan. 24, 2017.

The bank said proceeds of the stock rights offer would support its medium-term growth objectives amid the country’s favorable macroeconomic prospects.

“The additional capital will also allow BDO to sustain its momentum and take advantage of the country’s growth opportunities,” the bank said in a disclosure to the PSE.

The fresh funds would also help provide a comfortable buffer over higher capital requirements with the forthcoming imposition of the Domestic Systemically Important Bank (DSIB) surcharge by the BSP.

The BSP has directed DSIBs to set aside higher levels of capital for potential losses. “Too big to fail” banks are characterized as banks whose distress or disorderly failure would cause significant disruptions to the wider financial system and the economy.

DSIBs are required to maintain additional common equity tier (CET1) of between 150 and 250 basis points of the banks’ risk-weighted assets (RSA) beginning January 2017 until the same are fully in place by January 2019.

BDO’s consolidated CET1 ratio and capital adequacy ratio (CAR) of 11.3 percent and 13.1 percent, respectively, are above the current regulatory minimum levels, even with the gradual implementation of the DSIB surcharge.

Over the past five years, BDO’s customer loan portfolio grew at a 19-percent compounded annual growth rate, outpacing the industry’s 17 percent.

“The additional capital will allow BDO to sustain its momentum and take advantage of the country’s growth opportunities,” it said.

The Sy-led bank is looking at further expanding its footprint particularly in the middle markets as well as small and medium sized enterprises.

SM Investments Corp. (SMIC), the controlling and majority shareholder, has expressed its full support for BDO’s expansion plans and rights offer.

“SMIC commits to subscribe to its proportionate share and is willing to underwrite any shares not taken up by minority shareholders,” the bank said.

BDO is ranked as the largest bank in terms of total assets, loans, deposits, capital and trust funds under management. It has more than 1,000 operating branches and over 3,000 ATMs nationwide. It also has a branch in Hong Kong as well as 26 overseas remittance and representative offices in Asia, Europe, North America and the Middle East.