Security Bank raising P5B from deposit offer

PHOTO from Security Bank

Lender Security Bank Corp. has rolled out a new offering of high-yielding deposits, seeking to raise at least P5 billion to better manage liabilities while expanding funding and investor base.

The long-term negotiable certificates of deposits (LTNCDs) will have a tenor of five years and six months. They are being pitched to investors at an indicative rate of 3.875 percent per annum, the bank said in a press statement.

The base offer of P5 billion can be upsized depending on demand for the offering, which will run until October 30.

To drum up interest on the offering, the bank is conducting a multi-city roadshow covering Pampanga, Davao and Cebu.

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.

In a press statement, Security Bank said LTNCDs have been an “effective way for banks to raise cost-effective funding, while offering a new investment product to their own deposit base, most of whom are looking for long term assets that provide higher yields than traditional time deposits.”

HSBC and Standard Chartered Bank were mandated as joint lead arrangers and bookrunners. They are also the selling agents, together with Security Bank and Multinational Investment Bancorporation.

Minimum denomination for this offering is P50,000 with increments of P10,000 thereafter.

Security Bank intends to list these LTNCDs on the Philippine Dealing and Exchange Corp., to provide secondary market liquidity to investors who would like to trade the instruments.

The Security Bank group had a total of 296 branches all over the country and 667 automated teller machines as of August. It ranks as the fifth largest listed bank in terms of total assets and capital, respectively amounting to P775 billion and P101 billion.

Last year, Security Bank took in Bank of Tokyo-Mitsubishi UFJ Ltd. (BTMU) – the largest bank in Japan and a member of the Mitsubishi UFJ Financial Group – as strategic investor and partner. BTMU invested P36.9 billion in the bank in exchange for a 20 percent equity stake.

Security Bank finished 2016 with a net income of P8.6 billion and a return on equity of 10.4 percent.