BDO to hike capital of rural banking unit

MANILA, Philippines — Sy-owned BDO Unibank Inc. plans to increase the capital position of its rural banking arm by as much as P2 billion to support the loan needs of micro, small and medium enterprises (MSMEs).

BDO announced yesterday its plan to expand by up to P2 billion the outstanding capital of BDO Network Bank (BDONB) through the issuance of primary common shares.

According to BDO, the capital increase will allow BDONB to finance the sustained expansion of its salary loan program.

The P2 billion additional capital will enable BDONB to widen its MSME book, which grew by an average of around 28 percent in the last three years to P37 billion. The capital increase will also allow BDONB to cover new markets in rural areas and serve the underbanked segments of the population.

Majority shareholder BDO and minority shareholder Osmanthus Investment Holdings Pte. Ltd. committed to participate in the capital-raising activity up to their proportionate stakes. BDO has an 85-percent share in BDONB, while Osmanthus has a 15-percent stake in the firm.

According to BDO, the capital infusion will be done through the periodic subscriptions of primary common shares of up to P2 billion.

Meanwhile, BDO disclosed that its board of directors approved the declaration of stock dividends equivalent to 20 percent of the bank’s outstanding capital.

Further, the Sy-led bank approved a plan to increase its authorized capital stock to 8.5 billion common shares from 5.5 billion common shares. The board also approved the amendment to BDO’s articles of incorporation to reflect the increase in capital.

“The stock dividend declaration is a testament to BDO’s commitment to continue investing in the business and provide consistent, steady returns and value to its shareholders. Shareholders will gain additional shares, which they can keep for the long haul and grow in value, or in case they need liquidity, sell through the stock market at their discretion,” BDO said.

“The increase in the bank’s authorized capital stock provides the bank the flexibility to increase its capital during periods of rapid organic growth or in the event of inorganic opportunities,” the bank said.

BDO said these decisions would allow to expand business revitalize its franchise and deliver earnings.