MANILA, Philippines–Local banking giant Metropolitan Bank and Trust Co. plans to raise as much as P20 billion from an offering of high-yielding deposits, seeking to harness funds from the cash-awash financial system.
Metrobank’s board has approved the issuance of P20 billion worth of long-term negotiable certificates of deposits (LTNCD).
LTNCDs are negotiable certificates of time deposits and are tax-exempt for qualified individuals if held for at least five years. The LTNCDs are insured by the Philippine Deposit Insurance Corp. (PDIC) up to a maximum coverage per depositor, currently at P500,000. These are bank products with long tenors, usually five to 10 years, which are offered to investors looking for a higher interest rate compared to regular savings accounts or shorter-term deposits.
“The timing and launch of the LTNCD program will be determined following the receipt of regulatory approvals and will be subject to market conditions prevailing at such time,” the disclosure said.
Many local banks have taken the LTNCD route to boost funds for lending and expansion.
Earlier this week, Metrobank likewise completed another P6.5 billion fund-raising through the issuance of debt notes qualifying as Tier 2 or supplementary capital. These Tier 2 notes carry a loss-absorption feature, making them eligible as supplementary capital under the Basel 3 capital adequacy framework.
Universal and commercial banks were required by the BSP to adopt starting Jan. 1, 2014 the capital adequacy standards of Basel 3—a complex package of reforms designed to improve the ability of banks to absorb losses.–Doris C. Dumlao
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