MANILA, Philippines—Lucio Tan’s Philippine National Bank has obtained approval from the Bangko Sentral ng Pilipinas to offer as much as P5 billion worth of high-yielding, negotiable time deposit certificates.
The launch of the long-term negotiable certificates of deposits (LTNCDs) is expected to take place “in the coming weeks, subject to favorable market conditions and compliance with regulatory requirements,” PNB said in a disclosure to the Philippine Stock Exchange on Wednesday.
Proceeds from this offering will be used by PNB for “general corporate purposes and to further strengthen banking operations,” the disclosure 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 deposit insurance with the Philippine Deposit Insurance Corp. up to a maximum amount of P500,000 per depositor.
During the bank’s stockholders meeting last May, PNB, which is on its first year of its being merged with Allied Bank, has said that refinancing P10.5 billion worth of maturing Tier 2 debt notes through the issuance of LTNCDs was among its priorities. After an initial batch of LNTCDs worth P5 billion, the bank plans to issue another P5 billion to refinance the balance.
PNB executive vice president and head of treasury Horacio Cebrero III earlier said the bank would likely offer LTNCDs with a tenor of 5.5 years.
As a strategy, the bank seeks to increase lending to individual consumers, government and small-medium enterprises so that these will eventually account for half of its loan book while the remaining half would still be devoted to corporate lending.