Metrobank aims to launch stocks rights offer in April

LOCAL banking giant Metropolitan Bank & Trust Co. intends to launch its planned P32-billion stock rights offering by April this year.
The exercise is aimed at raising funds for medium-term expansion of the bank, according to Metrobank chair Arthur Ty.
The sale of new shares to existing investors will allow the bank to bring its tier 1 or core capital adequacy ratio to risk assets to 13 percent while expanding lending activities, Ty said in a chance interview at the sidelines of the annual banking reception hosted by the Bangko Sentral ng Pilipinas on Friday.

For this year, Ty said Metrobank was expected to sustain a double-digit growth in lending.
“We’re bullish because the economy is strong,” Ty said. “I think this year, most of the banks will grow like that (double-digit).”

The fresh capital to be generated from the stock rights offering, Ty said, would fund the bank’s expansion for the next few years.  He said this fund-raising could be launched in a single tranche by April this year.

He said Metrobank had to calibrate its capital-raising program to temper any dilutive effect on return on equity.

Metrobank’s board last week approved the P32-billion stock rights offering, subject to receipt of regulatory approvals and depending on 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.
The bank sees these opportunities not only in the large cap business segment, but more in its core franchise, the middle income market and small to medium enterprises (SME) segments, as well as in the growing consumer space.

The bank has mandated J.P. Morgan and UBS as joint global coordinators, joint international lead managers and joint book runners for this offering. First Metro Investment Corp. (FMIC) is the sole domestic lead manager and joint book runner while HSBC is co-manager.

As of the end of September 2014, Metrobank’s total asset base expanded by 20 percent to P1.5 trillion versus the previous year. Loan growth was 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 over the same period.

The additional capital is expected to enhance the bank’s capital ratios in line with the tighter requirements under Basel 3, which 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 firewall against periods of stress.