Two of the country’s biggest banks are all set to brave the capital market through stock rights offerings later this month, with Ayala-led Bank of the Philippine Islands selling P25 billion and tycoon Lucio Tan-led Philippine National Bank selling P11.6 billion in fresh equity.
BPI priced on Friday its stock rights offering at P67.50 a share. Shareholders will get one new share for every 9.602 existing common shares held, the bank disclosed to the Philippine Stock Exchange. Its offering, consisting of 370.37 million shares, will run from Jan. 20 to 30.
PNB is set to begin its offering of shares to existing shareholders soon after BPI’s equity launch. The bank priced its stock rights offering at P71 a share at an entitlement ratio of 15 news shares for every 100 old shares held. Its offering will begin on Jan. 27 and end on Feb. 3.
Both banks are beefing up their core or tier 1 equity with the implementation of Basel 3 capital adequacy ratio framework, which introduces a complex package of reforms designed to improve the ability of banks to absorb losses, extends the coverage of financial risks and requires a stronger firewall against periods of stress.
BPI had said that the offer would strengthen its positioning to support the following critical strategic growth initiatives: Extend its credit and balance sheet to meet increased demand from the growing Philippine economy; broaden and increase its retail channels; invest in and enhance its corporate banking and investment banking capabilities, and evaluate and pursue any inorganic growth opportunities as they may arise.
Acting as joint bookrunners and underwriters for BPI’s stock rights offering are BPI Capital Corp., Goldman Sachs (Singapore) Pte. and JP Morgan Ltd. The sole global coordinator and lead manager is BPI Capital.
For PNB’s offering, the sole domestic underwriter is PNB Capital and Investment Corp. while the joint international lead managers and international underwriters are Credit Suisse (Singapore) ltd. and Deutsche Bank AG Hong Kong.
PNB intends to use the proceeds primarily to build and refocus its consumer lending business through capital infusions into fully owned subsidiary Allied Savings Bank, to mitigate the reduction in the capital adequacy ratio once some of its tier 2 capital instruments become ineligible as capital by yearend with the implementation of Basel 3 effective January 2014.
The fresh capital infusion is also intended to support the bank’s asset growth in 2014 and beyond. Doris C. Dumlao