East West Bank readies P50-B capital buildup plan

Gotianun-led East West Bank has mapped out a P50-billion capital build-up program to support its aggressive consumer-focused expansion over the medium-term.

In a disclosure to the Philippine Stock Exchange yesterday, East West said its board had approved an increase in authorized capital stock to P50 billion, more than double the current authorized capital stock of P20 billion.

The proposed capital of P50 billion will consist of 4.5 billion common shares with a par value of P10 per share and 500 million preferred shares with a par value of P10 per share.

The board also approved the declaration of 50 percent stock dividend or 750 million common shares to cover the required minimum subscription and payment for the increase of authorized capital stock.

These matters will be up for shareholders’ approval in a special meeting scheduled this Aug. 30.

Antonio Moncupa, East West vice chair, earlier said that the bank’s architectural infrastructure was designed for it to become a bigger bank.

If East West aims to be build a branch network of 500 from 445 at present—with target average resources of P1 billion per branch. This means its total resources should grow to P400 billion to P500 billion, Moncupa said.
This is seen to require P50 billion in capital to maintain a 10 percent capital adequacy ratio.

Including about P14 billion in retained earnings, East West is currently capitalized at about P34 billion as of the end of 2016.

The bank intends to cover the proposed expansion in capital to P50 billion with a combination of retained earnings and by tapping the capital market for one last time.

The fresh capital-raising will be in the form of stock rights offering or sale of new shares to existing shareholders, Moncupa had said. It’s possible that this may happen within this year, he said earlier this year.

In the last three years, East West has grown its loan book by 20 percent. This growth is expected to be sustained in the years ahead.

East West currently has a balance sheet of close to P300 billion.