East West Bank plans P10B stock rights offer

Gotianun-led East West Bank plans to go back to the local capital market to support balance sheet expansion by the third quarter with an offering of P10 billion worth of shares to existing shareholders.

“What’s clear is we want to grow the bank, so we look for equity,” East West chair Jonathan Gotianun said in a chat with reporters after the stockholders meeting of parent conglomerate Filinvest Development Corp. on Friday.

A stock rights offering worth P10 billion may be undertaken towards the end of the year, he said. At the same time, he said East West was keeping its option to bring in a foreign strategic partner who can add more value to the bank.

If East West could find such a suitable foreign partner, Gotianun said the controlling group would be willing to cede around 20 percent control to the partner. “But there are no specific discussions at this time,” he said.

FDC president Josephine Gotianun-Yap said the group would consider a partner that would bring synergy to East West, a consumer-banking focused bank.

East West listed on the Philippine Stock Exchange in 2012. The last time it tapped the local equities market was in 2015 when it raised P8 billion from a stock rights offering.

The bank has earlier obtained the go-signal from the Securities and Exchange Commission to jack up its authorized capital to P50 billion from P20 billion, to support its aspiration to be a much bigger bank. Previously, the bank was authorized to issue only 1.5 billion common shares and 500 million preferred shares with par value of P10 each.

Proceeds from the next round of equity deal will be used to grow the bank’s earning assets rather than put up more branches.

When the bank went public in 2012, Gotianun noted that the commitment was to grow the branch/store network to 300 to 350 in three years. Having exceeded this target with a branch network of 450 to date, he said East West how had a “comfortable” distribution network.

“We’re in most of the most important cities- primary and secondary- so I think we have decent coverage,” Gotianun said.

“Our main focus right now is to try to grow our base. Over the years we’ve added stores and I think we want to improve customer service. This involves training our people to really attend to customers, improve productivity and grow the base these new stores,” he said.

Gotianun added that it’s likewise part of the bank’s objective to eventually start paying cash dividends to shareholders.