Local banking giant Metropolitan Bank and Trust Co. has obtained approval from the Bangko Sentral ng Pilipinas to double its authorized capital stock to P100 billion in line with preparations for a stiffer regulatory environment under the Basel 3 framework.
In a disclosure to the Philippine Stock Exchange, Metrobank said the BSP had approved an amendment to its bylaws to increase the authorized capital from the current P50 billion to P100 billion, divided into four billion common shares and one billion preferred shares with a par value of P20 each.
The change in bylaws will still need the approval of the Securities and Exchange Commission alongside the declaration of a 30-percent stock dividend amounting to P12.67 billion. This is equivalent to 633.42 million shares to be taken out of the bank’s paid-in surplus, representing the minimum 25-percent subscribed and paid-up capital for the doubling of the authorized capital stock.
The increase in authorized capital stock gives Metrobank flexibility to sell either equity or Basel 3-compliant tier-2 notes in the future.
It was earlier reported that Metrobank was planning to issue as much as $500 million worth of debt notes qualifying as tier 2 or supplementary capital under the Basel 3 framework. The offering of Basel 3-compliant tier 2 notes will be made in one or more tranches “as part of the bank’s regulatory capital compliance” in accordance with the Basel 3 framework.
Universal and commercial banks are required by the Bangko Sentral ng Pilipinas to adopt by Jan. 1, 2014, the capital adequacy standards under Basel 3, which introduces a complex package of reforms designed to improve the ability of banks to absorb losses, extend the coverage of financial risks and have a stronger firewall against periods of stress.
Basel 3-compliant tier 2 notes must have a provision for the instrument to either be written off or converted to common equity during certain trigger events.
In the first quarter, Metrobank tripled its first quarter net profit from a year ago to a quarterly record high of P11.4 billion, thereby posting the highest profit among local banks. This included one-time gains from the sale of its remaining interest in affiliate Toyota Motors Philippines Corp. last January.
Metrobank ended the quarter with P1 trillion in consolidated assets and P133.2 billion in total equity. Total capital adequacy ratio (CAR) to risk assets remained well above the regulatory limit at 17.3 percent, with core or tier 1 CAR at 14.8 percent.