East West to issue P5B worth of LTNCD
MANILA, Philippines—Gotianun-led East West Banking Corp. has secured government approval to issue new time-deposit instruments that will give the lender access to more stable funding to support its portfolio.
In a statement, the company said the Bangko Sentral ng Pilipinas (BSP)’ Monetary Board had approved the bank’s plan to issue P5 billion in long-term negotiable certificates of time deposits (LTNCD).
“The issue size is up to P5 billion, with a minimum maturity of five years and one day, up to a maximum of five years and six months from the issue date,” East West said in a disclosure to the Philippine Stock Exchange.
“Issue date will be subject to the agreement between East West and its arranger, Unicapital Inc. Interest is on a fixed rate basis with rate subject to prevailing market conditions,” the bank said.
The policymaking Monetary Board approved East West Bank’s request last Oct. 25, the latter told the local bourse.
East West’s board approved the issuance of the LTNCDs last July.
The company said this was part of the bank’s efforts to improve its liability management, and match the funding of long term assets.
LTNCDs are time deposits but have longer maturity and carry higher yields.
While they 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.
Last September, East West Bank revealed plans to beef up its capital by as much as P10 billion to prepare the bank for future growth amid stiffer capital adequacy requirements under Basel 3.
Universal and commercial banks are required by the BSP to adopt by January 2014 the capital adequacy standards under Basel 3, which introduces a complex package of reforms designed to improve the ability of bank capital to absorb losses, extend the coverage of financial risks and have a stronger firewall during periods of stress.
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