China Banking Corp. to raise P8B in capital
MANILA, Philippines — The China Banking Corp. is raising P8 billion in fresh capital from the sale of new shares to existing investors, preparing for growth opportunities in the years ahead while in a regime of tighter capital adequacy regulations.
China Bank, which is led by the sons of tycoon Henry Sy, is also recapitalizing its thrift bank arm China Bank Savings through a capital infusion of up to P800 million in tranches.
For its stock rights offering of up to P8 billion, China Bank has mandated Citigroup and J.P. Morgan as joint global coordinators, joint lead managers and underwriters, the bank said in a disclosure to the Philippine Stock Exchange on Thursday. The bank had obtained board approval for these capital-raising plans.
“The additional capital will enable the bank to pursue growth strategies while ensuring that its capital adequacy levels remain above the new Basel 3 requirements, particularly in light of the recent acquisition of Planters Development Bank,” the disclosure said.
Universal and commercial banks in the country have been required by the Bangko Sentral ng Pilipinas to adopt starting this year the capital adequacy standards under Basel 3, which introduces a complex package of reforms designed to improve the ability of banks to absorb losses. This new regulatory framework also extends the coverage of financial risks and puts in place stronger firewalls against periods of stress.
For its part, China Bank said its core strategy was aimed at “expanding its market position by growing risk-weighted assets with a focus on the small and medium enterprise (SME) and consumer segments while also extending the depth and breadth of its retail distribution.”
At the same time, the bank’s board believed that the rights offering would help increase the visibility of China Bank’s stock with investors and the trading liquidity of its common shares on the local stock exchange.
“The major shareholders of the bank have expressed support for the stock rights offer,” the disclosure said.
China Bank is part of the banking businesses of Sy-led SM Investments Corp., which runs the biggest banking, property and retailing enterprises in the country.