Metrobank sets stock rights offering to raise P32 billion

MANILA, Philippines–Local banking giant Metropolitan Bank & Trust Co. (Metrobank) plans to boost its core or tier 1 capital by P32 billion through the sale of new shares to existing investors.

In a disclosure to the Philippine Stock Exchange on Thursday, the bank said its board had approved this stock rights offering, subject to receipt of regulatory approvals as well as market and other conditions.

“The bank believes that the continued strengthening of the Philippine economy, a growing middle class, and low credit penetration create sustainable attractive growth opportunities for the banking sector in general. Specifically, Metrobank sees these opportunities not only in the large cap business segment, but especially in its core franchise, the middle-market and small to medium enterprises (SME) segments, as well as in the growing consumer space,” the bank’s disclosure said.

“The capital raising exercise is expected to enable the bank to pursue these business prospects and support its accelerating growth momentum,” it added.

Metrobank has mandated J.P. Morgan and UBS as joint global coordinators, joint international lead managers and joint bookrunners. First Metro Investment Corp. (FMIC) is sole domestic lead manager and joint book runner while HSBC is co-manager.

As of the end of September 2014, the bank’s total asset base expanded by 20 percent to P1.5 trillion versus the previous year. Loan growth grew faster than it expected at 21 percent year-on-year to P697 billion, supported by the 23 percent growth in deposits to P1.1 trillion.

“The bank likewise intends to use its expanded capital base for capacity building by increasing its sales coverage and distribution network,” the bank said.

The additional capital is expected to enhance the bank’s capital ratios, keeping it well above the Philippine Basel 3 requirements. Basel 3 introduces a complex package of reforms designed to improve the ability of banks to absorb losses. This framework also extends the coverage of financial risks and puts in place stronger firewalls against periods of stress.

As of the end of September, the bank had a total capital adequacy ratio of 16.2 percent and common equity tier 1 of 12.1 percent, both of which were well above the Bangko Sentral ng Pilipinas’ requirement of 10 percent and 8.5 percent, respectively.

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