PSBank set to raise P5B

One of the largest thrift banks in the country Friday announced plans to grow further—and possibly acquire another financial institution—with the proceeds of a capital raising exercise it will undertake this year.

In a disclosure to the Philippine Stock Exchange Friday, Philippine Savings Bank said its board of directors had approved a plan for the bank to issue up to P5 billion worth of unsecured subordinated debt.

“The purpose of this issuance is to increase and strengthen the capital base of PSBank,” it told the bourse. “With the concurrent rise in its capital adequacy ratio, the bank will be allowed to freely pursue its expansion plans and prepare it for any future acquisition opportunity.”

Funds will be raised through the issue of a debt instrument in one or more tranches, with a term of ten years and a call option on the fifth year, subject to the approval of banking regulators, the thrift bank added.

Separately, PSBank president and CEO Pascual Garcia told the Inquirer that the funds to be raised would boost the bank’s capital base and specifically help it face the challenges of the Basel 3 banking framework, which requires financial institutions to set aside a greater amount of capital to meet growing market risks associated with the faster paced banking environment.

More importantly, Garcia said, the funds will also allow the bank to position itself for “possible acquisition opportunities.”

PSBank is a subsidiary of Metropolitan Bank and Trust Co., an institution controlled by the Ty family.

“We will look at acquiring another financial institution next year and after,” Garcia said, without identifying the bank’s acquisition target.

PSBank is also currently building up its branch network and will likely end the year with 200 branches nationwide, Garcia said.

He pointed out that PSBank—the second largest thrift bank in the country after BPI Family Bank of the Ayala group—was ranked the fifth strongest bank in the country by the Asian Banker magazine.

According to the industry publication, the strongest bank is Metrobank, followed by Bank of the Philippine Islands, Security Bank and Union Bank of the Philippines.

Additionally, the publication also ranked PSBank as the 57th strongest bank in the Asia-Pacific, based on its survey of the 500 most stable financial institutions in the region.

“We are pleased that a Philippine savings bank can build a foundation of strength and profitability vis-a-vis larger commercial banks, not only in the Philippines, but in the Asia-Pacific region, as well,” Garcia said.

At the end of the third quarter, PSBank reported total assets of P115 billion, liabilities of P102 billion and stockholders’ equity of P12.9 billion.

On the PSE, the bank’s shares ended yesterday’s session at P70 apiece, down by P1 from the previous session.