BDO’s $1B rights offer OK’d for June
By Doris C. DumlaoPhilippine Daily Inquirer
MANILA, Philippines–The Philippine Stock Exchange has approved a $1-billion stock rights offering planned by Banco de Oro Unibank for next month, an exercise meant to boost the core capital and growth objectives of the country’s largest bank.
In a circular, the PSE board said it had approved the listing of up to 896 million shares to cover the stock rights offering of BDO, which will give common shareholders on record as of June 14 the right to buy one share for every three shares held.
The stock rights offering of BDO—the banking arm of tycoon Henry Sy—will run from June 18 to 27 while the listing of the shares is targeted for July 4.
The offering will be priced on June 5. The price will be computed based on a volume-weighted average price and subject to a 20-25 percent discount, the circular said.
BDO has mandated Citigroup Global Markets, Deutsche Bank AG-Hong Kong, J.P. Morgan Securities and United Overseas Bank to arrange this offering.
Based on the circular, the offer aims to strengthen the core tier 1 (equity) capital of BDO, “further solidifying the Bank’s capital adequacy and financial strength, positioning it to support critical strategic growth initiatives.”
These initiatives were identified by BDO as:
* extending its credit and the balance sheet to meet increased demand from the growing economy;
* deepening and expanding customer relationships while developing new business segments;
* broadening the product and services offered to the bank’s growing customer base; and
* evaluating and pursuing any inorganic growth opportunities as they arise.
The offering is thus meant to help the bank prepare for sustained loan growth in the years ahead and to meet the capital adequacy ratio (CAR) requirements under Basel 3, which the Bangko Sentral ng Pilipinas wants universal and commercial banks to adopt by Jan. 1, 2014.
Basel 3 introduces a complex package of reforms designed to improve the ability of banks to absorb losses, extend the coverage of financial risks and have stronger firewalls against periods of stress.
BDO’s planned capital-raising is seen to boost its CAR to 12.5 percent from 10 percent and double its tier 1 CAR ratio to 10 percent from 5 percent by January 2014 even if it were to expand its risk assets over the next two years.
SM Investments, the flagship holding firm of the Sy family, has committed to subscribe to its proportionate controlling stake in BDO and is “willing to underwrite the shares not taken up by the minority shareholders,” the disclosure said.
As end-2011, BDO is the country’s largest bank in terms of total resources (over P1 trillion), customer loans, total deposits and assets under management. It also has one of the largest distribution networks, with more than 740 operating branches and over 1,600 ATMs nationwide.
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Tags: Banco de Oro , Banking , banks , Business , Philippine , stocks , stocks offering
