Union Bank to triple capital to P23.1B, eyes acquisitions

MANILA, Philippines—Union Bank of the Philippines is seeking authority to triple its authorized capital to P23.1 billion “to seize growth opportunities,” including potential acquisitions.

Union Bank, which has submitted an offer to take over the assets and liabilities of shuttered Export and Industry Bank, obtained board approval to amend its articles of incorporation and boost its authorized capital from P6.7 billion to P23.1 billion, the bank said in a press statement.

The increase in capital is divided into 641 million common shares and 100 million preferred shares with a par value of P10 and P100, respectively.

The bank’s board likewise approved the declaration of a 65 percent stock dividend amounting to about P4.2 billion, to be issued from the increase in authorized capital.

The preferred shares will be non-voting, except as may be allowed by law, and have preferential rights over common shares in dividend distribution. The other terms and conditions of the preferred shares will be set when the bank is ready to issue the shares.

“The economy has been fast expanding in the last few years and the prospects of a sustained higher growth rate [are] expected. Big-ticket items are on the planning board and Union Bank wants to participate and seize the opportunities that arise in these very favorable economic developments particularly in infrastructure financing. (This is) also aligned with the fact that the forthcoming ASEAN Economic Integration will require larger banks to underwrite these financial and economic undertakings, which is part of the growth strategy of the bank,” said Victor Valdepeñas, Union Bank president and chief operating officer.

In particular, the increase in authorized capital is seen as allowing Union Bank to “seize growth opportunities aligned with its strategy on leveraging capital, focused mainly on low-cost CASA (current account-savings account) deposits build-up and consumer-led loan expansion in support of the bank’s thrust in achieving a more balanced and sustainable revenue stream.”

The rehabilitation plan eyed by Union Bank for Export Bank was backed by the uninsured depositors of EIB, which has about P10.7 billion in uninsured deposits, a majority of whom — holding a combined deposit of P8.2 billion — had given special powers of attorney to a group called “Coalition of EIB Uninsured Depositors” seeking the rehabilitation of the bank.

Union Bank has had experience in mergers and acquisitions in the past two decades, having taken over City Savings Bank in 2013, International Exchange Bank in 2006 and The International Corporate Bank in 1994.

Aside from Export Bank, Valdepeñas said Union Bank would consider to bid for United Coconut Planters Bank once the government auctions off sequestered shares accounting for a controlling stake in the bank.

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