UnionBank raises P12 billion via stock rights offer

MANILA, Philippines — Union Bank of the Philippines has raised P12 billion through the issuance of shares to existing shareholders to fund the capital infusion to its digital banking arm and for other general corporate purposes.

In a disclosure to the Philippine Stock Exchange (PSE), the Aboitiz-led bank said it has issued 210.97 million shares at a price of P56.88 apiece to existing shareholders through a stock rights offering. 

This brought the number of issued shares of UnionBank to 2.35 billion, up from 2.14 billion.

 “Please note that the actual subscription of the rights shares will be effective only upon listing of the rights shares on the PSE on Feb. 6,” the bank stated in the disclosure. 

About 59 percent  of the total amount to be raised, or P7 billion, will be used to expand the bank’s loan portfolio, while 25 percent or P3 billion will be infused into UnionDigital Bank.

The bank decided to trim the size of its planned fund raising activity to up to P12 billion from P20 billion as additional capital requirements could be funded by existing businesses.

 Last Oct. 28, the bank’s board of directors approved  capital raising activities of up to P20 billion, which may take in the form of a stock rights offering to all existing shareholders or a private placement, subject to market conditions.

“The bank’s latest balance sheet projections based on its economic outlook shows that any additional capital requirements beyond P12 billion can be internally generated from existing businesses,” it said.  

 In May last year, the bank raised P40 billion through a stock rights offering to partially fund the acquisition of the retail banking business of global banking giant Citigroup Inc. in the Philippines.

 UnionBank ended up spending P72 billion instead of P55 billion for the acquisition of Citi’s retail banking business in the Philippines.

The profit of the listed bank was almost steady at P12.7 billion as revenue grew by 16 percent to hit a record high of  P52.2 billion last year.

 UnionBank president and CEO Edwin Bautista earlier said the bank  made a commitment to execute on key strategic imperatives at the start of 2022.

 These include the seamless integration of the acquired Citi consumer business, which includes customers and employees as well as the commercial launch of UnionDigital as one of the six digital banks licensed by the Bangko Sentral ng Pilipinas.  

“We delivered on our promise and the market has rewarded us for it. Our recent stock performance, increase in stock trading volumes, and the strong commitment from our major shareholders on our stock rights offering reflect shareholders’ trust in the value that will be created from the execution of our strategies,” Bautista said.