Century-old Philippine National Bank plans to raise P20 billion from an offering of higher-yielding long-term deposits.
In a disclosure to the Philippine Stock Exchange, PNB said its board had approved the issuance of up to P20 billion in long-term negotiable certificates of deposit (LTNCDs).
“The proceeds will be used to extend the maturity profile of the bank’s liabilities as part of overall liability management and raise long-term-funds for general corporate purposes,” the bank said.
LTNCDs are negotiable certificates of deposit with a designated maturity, and represents a bank’s obligation to pay the face value upon maturity, with periodic coupon or interest payments during the life of the deposit. They are covered by insurance provided by Philippine Deposit Insurance Corp. up to P500,000 per depositor.
While the LTNCDs cannot be pre-terminated unlike regular time deposits, they are negotiable so they can be sold in the secondary market to other investors. By using the LTNCD structure, which is tax-free, banks can offer better yields to clients.
PNB, the banking arm of the Lucio Tan group of companies, plans to issue the LTNCDs in one or more tranches, subject to the approval of the Bangko Sentral ng Pilipinas.
In the meantime, the bank also approved the declaration of cash dividend amounting to P1 per share or a total of P1.249 billion to be taken out of the bank’s unrestricted earnings. This will be given to stockholders of record as of Aug. 19 payable on or before Sept. 15, subject to regulatory approvals. Doris Dumlao-Abadilla