Security Bank offers high-yield deposits

Security Bank Corp. is raising at least P3 billion from the offering of high-yielding long-term deposits to finance expansion programs.

In a disclosure to the Philippine Stock Exchange, Security Bank said it had started offering long-term negotiable certificates of deposit (LTNCDs) with a seven-year tenor on Thursday and that the offer would run until August 8. The target issue date is August 15.

Foreign banks Deutsche Bank and Standard Chartered were mandated by Security Bank as lead arrangers for this new offering of LTNCDs.

LTNCDs are time deposits but have longer maturity and carry higher yields. While they cannot be pre-terminated unlike regular time deposits, they are negotiable, which means these can be sold in the secondary market to other investors.

By using the LTNCD structure, which is tax-free because of the long tenor, banks can offer better yields to clients.

“This is a reissuance of our original LTNCD (issue) early this year. This is to fund our asset build-up which grew 20 percent during the first quarter,” said Security Bank executive vice president and head of financial markets Rafael Algarra Jr.

The LTNCDs will be issued at par and at a minimum denomination of P10,000. The minimum initial investment size is P50,000.

Early this year, Security Bank raised P5 billion from the issuance of LTNCDs at an interest rate of 5.5 percent a year for a seven-year tenor, the first in local banking history. Most LTNCD offerings by banks in the country have a tenor of a little over five years.