In statement, the Bank of Commerce — an affiliate of San Miguel Corp. — said it will issue “in multiple tranches” the long-term negotiable certificates of time deposit next year “to diversify funding sources and support its expansion plans.”
“The first tranche is set in the first quarter of next year,” the bank said.
In a recent meeting, the Monetary Board of the Bangko Sentral ng Pilipinas granted the request of Bank of Commerce for the authority to issue the debt instruments in several batches tranches over a one-year period.
Standard Chartered Bank and Philippine Commercial Capital Inc. are the transaction’s joint lead arrangers while Standard Chartered Bank, along with Bank of Commerce, will act as selling agents.
These instruments are bank deposit products denominated in Philippine pesos with a minimum maturity of five years. Individual investors who hold on to these debt securities for at least five years will enjoy tax-free interest earnings. Similar to a time deposit, long-term negotiable certificates of time deposit offer higher interest rates.
In addition, these instruments are also insured by the Philippine Deposit Insurance Corp. up to maximum coverage per depositor of P500,000 in aggregate with any existing deposits with the bank.
However, unlike a time deposit, these debt instruments cannot be preterminated. They can, however, be sold on the secondary market should the investor wish to liquidate the investment.
According to the latest central bank data, the Bank of Commerce is the 17th largest bank in the country with P139.7 billion in total assets at the end of June 2019, behind Philippine Trust Co. and ahead of Robinsons Bank Corp.
In operation since 1963, the bank offers deposit and cash management products, corporate banking, consumer banking, credit card services, e-banking solutions, trade and remittances, treasury and trust services.
It was acquired by San Miguel in 2008 which resulted in reinforced capital, bolstered reserves, and more proficient risk and management system, as well as a new management team at the helm. It currently has 140 branches.
Last year, Bank of Commerce registered a net income of P400 million, while net loans and receivables stood at P70.6 billion. Deposits grew to P131.2 billion.