Philippine Bank of Communications plans to build up a P27-billion capital base and simplify its capital structure by converting all existing preferred shares into common shares.
In a disclosure to the Philippine Stock Exchange Friday, PBCom said the Bangko Sentral ng Pilipinas has approved an increase in the bank’s authorized capital stock to P27 billion, divided into a single class of 1.08 billion common shares with a par value of P25 each.
The bank has 52.6 million outstanding common shares and 120 million preferred shares. Preferred stocks are prioritized in dividend distribution but are usually nonvoting.
PBCom chair Eric Recto told the Inquirer that the capital buildup program to P27 billion included a fresh capital infusion of P3.5 billion and the conversion of the preferred shares to common shares. The capital infusion has been done through a private placement early this year, Recto added.
The bank is in the process of securing the approval of the Securities and Exchange Commission before the amendment in its charter can be made effective and pave the way for the increase in its authorized capital.
The conversion of the 120 million preferred shares into common shares, Recto said, was meant to simplify the capital structure into a single class of securities. He said the common and preferred shares had exactly the same features.
“The preferred [shares] were an offshoot of the PDIC [Philippine Deposit Insurance Corp.] FAA [financial assistance agreement] way back in 2004 that required the shareholders then to subscribe to a different class of shares. That was a legacy issue which no longer exists,” Recto said.
Recto was named chair of PBCom last May while his uncle, former Marcos trade minister Roberto Ongpin, remains as co-chair.
PBCom was incorporated as one of the earliest non-American foreign banks in the country in 1939. Operations were temporarily interrupted during World War II but were immediately reconstituted in 1945 through the infusion of fresh funds. The bank came under full Filipino ownership in 1974 when a group of industrialists led by Ralph Nubla Sr. bought a majority stake.
In 2011, the major shareholders of the bank, namely the Chung, Luy and Nubla groups, signed a memorandum of agreement with Ongpin-led ISM Communications Corp. for the sale of a controlling stake in the bank. Ongpin’s group paid P4.6 billion to acquire 97 percent of PBcom, marking the group’s foray into the highly competitive banking business.