Security Bank Corp. on Friday started offering as much as P10 billion worth of debt notes that will qualify as supplementary or tier 2 capital under the Basel 3 capital adequacy framework.
In a statement, Security Bank said the public offering would run from June 19 to July 3, with the issue date set on July 11.
The notes will have a term of 10 years, with an issuer’s call option after five years. Indicative interest rate may range from 5.25 to 5.375 percent, said a banking source privy to the offering.
“Security Bank is issuing the notes to further increase its total capital adequacy ratio in order to support the continuing growth of the bank’s financial assets,” SBC said in its disclosure to the Philippine Stock Exchange.
“Security Bank’s notes issuance is in line with the more prudent capital regulations implemented by the Bangko Sentral since January 2014, following the stricter Basel 3 global standard for banks,” it added.
Basel 3 framework is a complex package of reforms designed to improve the ability of banks to absorb losses. It also extends the coverage of financial risks and requires stronger firewalls to protect banks, especially during periods of stress.
The local bank has mandated Deutsche Bank, The Hong Kong and Shanghai Banking Corp. Ltd., and Standard Chartered Bank as joint lead arrangers of the offering and selling agents. Security Bank will be a limited selling agent while Multinational Investment Bancorporation will be the market maker and selling agent.
The notes may be purchased in minimum denominations of P500,000 and in increments of P100,000 thereafter. The interest on the notes will be paid quarterly.
Security Bank is the eighth largest in total assets among private domestic universal banks in the country with total assets of P377 billion. It is also the seventh largest among lenders with a loan portfolio of P166 billion, and the eighth largest in terms of capital with P42 billion as of March 31. Doris C. Dumlao