UBP to offer P5B in high-yielding deposit notes
MANILA, Philippines—Aboitiz-led Union Bank of the Philippines plans to raise about P5 billion this year from an inaugural offering of high-yielding deposits, taking advantage of the low interest rate environment.
Union Bank president Victor Valdepenas told reporters after the bank’s annual stockholders’ meeting on Friday that Union Bank was planning to offer long-term negotiable certificates of deposits with a five-year tenor. It will be the bank’s first time to offer LTNCDs.
“It’s very attractive to lock up long-term deposits at current interest rates,” Valdepenas said.
While the LTNCDs cannot be pre-terminated unlike regular time deposits, they are negotiable so they can be sold in the secondary market to other investors. By using the LTNCD structure, which is tax-free because of the long tenor, banks can offer better yields to clients.
LTNCDs are covered by insurance under Philippine Deposit Insurance Corp. but only up to P500,000 per depositor.
Union Bank has yet to mandate an investment house to arrange the LTNCD offering.
This fund-raising is seen boosting the bank’s efforts to grow its loan book, which is projected to grow in line or even slightly higher than the 15- to 20-percent pace of industry-wide lending expansion.
Asked whether Union Bank was planning any equity offering, Valdepenas said the bank would consider this for the purpose of enhancing trading liquidity and diversifying ownership.
He said Basel 3 compliance was not an issue for most Philippine banks, which were already well-capitalized based on this global capital adequacy framework.
