Metrobank plans to double capital base

MANILA, Philippines–Local banking giant Metropolitan Bank and Trust Co. has made plans to double its authorized capital stock to P100 billion, bracing for stiffer capital adequacy requirements under the Basel 3 framework.

In a disclosure to the Philippine Stock Exchange on Monday, Metrobank said its board of directors had approved a proposal to shareholders to amend the bank’s bylaws to pave the way for the P50-billion capital build-up.

The increase in capital was proposed to be implemented through the issuance of a combination of common and prepared shares.  Under the framework endorsed by the board, 1.5 billion common shares will be issued with a par value of P20 per share.

In line with this capital hike, the bank’s board approved the declaration of 30-percent stock dividends amounting to P12.67 billion equivalent to 633.42 million shares to be taken out of the bank’s paid-in surplus.

“This amount represents at least the minimum 25 percent subscribed and paid-up capital for the increase of the authorized capital stock from P50 billion to P100 billion,” the disclosure said.

Excluding the capital increase to be covered by the stock dividends, this leaves Metrobank the flexibility to offer 866.58 million additional common shares in the future. Based on current market prices (P117.30 per share), the proposed amendment will thus allow Metrobank to raise additional P101.6 billion in fresh equity in the future.

The proposed capital hike, however, will not necessarily be implemented in a single tranche but will give the bank flexibility to raise equity if and when a need arises.

The bank is also seeking leeway to issue one billion non-voting preferred shares with a par value of P20 per share.

These recommendations will still require approval from the bank’s shareholders during the upcoming meeting on April 15.  After that, the proposed change in bylaws will have to be approved by the Securities and Exchange Commission.