Banks race to raise funds via share sale, debt market

MANILA, Philippines — Philippines banks have lined up to tap the debt market to raise funds to beef up their war chest for loans amid the country’s growing economy.

For one, the Metropolitan Bank & Trust Co. of taipan George SK Ty received the green light from the Philippine Stock Exchange (PSE) to undertake a stock rights offering where it intends to raise P60 billion.

The country’s second largest bank intends to issue up to 810.83 million common shares to existing shareholders led by Ty’s flagship GT Capital Holdings Inc.

“The bank believes that the robust growth of the Philippines will continue to support the prospects for accelerated loan expansion across the various segments of the economy,” Metrobank said.

The Ty-led bank intends to capitalize on the growth opportunities of large cap corporates and especially in its core franchise, the middle market and small to medium enterprises segments.

“Rising per capita levels also bode well for the potential in the growing consumer space, specifically in credit cards, auto loans and home mortgage,” it said.

On the other hand, Ayala-led Bank of the Philippine Islands (BPI) has also announced plans to raise P50 billion through the sale of 567 million new shares to existing shareholders.

“Our planned stock rights offer is a vote of confidence in our country, our clients, and ourselves. The economic landscape will continue to change for the better in the next five years. We want to contribute to and benefit from that change,” BPI president and CEO Cezar Consing earlier said in a statement.

Yuchengco-led Rizal Commercial Banking Corp. is also raising up to P15 billion through a stock rights offering as part of the increase in its authorized capital to P28 billion from P16 billion.

Aside from stock rights offerings, several banks are issuing long-term negotiable certificates of deposits (LTNCDs) to raise funds to bankroll their expansion programs and beef up their capital.

LTNCDs offer higher interest rates but could not be pre-terminated like regular time deposits.

Last Feb. 21, Aboitiz-led Union Bank of the Philippines successfully raised P3 billion from the issuance of LTNCDs as part of the initial tranche of a P20 billion offering.

East West Banking Corp. of the Gotianun family is raising P15 billion from the issuance of LTNCD to diversify its funding sources as part of its overall liability management.

Last year, Philippine banks raised P72.91 billion via the issuance of LTNCD and accounted for more than a third or 35 percent of the record P207.43 billion funds raised via the Philippine Dealing and Exchange Corp. (PDEx) platform.

BPI raised a record P12.24 billion via the issuance of LTNCD that were listed on the PDEx platform last November, followed by the P11.8 billion raised by BDO Unibank Inc. of retail and banking magnate Henry Sy last August.

Other banks that issued LTNCD last year are Philippine National Bank of tobacco and airline magnate Lucio Tan with P10.1 billion, EastWest with P10 billion, Security Bank with P8.6 billion, Sy-led China Bank with P6.35 billion, Robinsons Bank with P4.18 billion, Philippine Savings Bank with P3.375 billion and Metrobank with P3.75 billion.