East West Bank sells P1.5B in deposit notes

MANILA, Philippines—Gotianun-led East West Bank has raised P1.53 billion from its initial issuance of long-term high-yielding deposits, an initiative meant to boost the bank’s liability management.

“The bank expects to continue the issuance program in several tranches starting in the first quarter of 2013, or as it deems necessary to fund its expansion activities,” the publicly listed bank told the Philippine Stock Exchange on Monday.

East West Bank’s LTNCD [Long Term Negotiable Certificate of Deposit] issuance carried a coupon rate of 5 percent per annum for a tenor of five years and six months.

The Bangko Sentral ng Pilipinas has given the bank the go-signal to issue as much as P5 billion worth of long-term negotiable certificates of deposits (LTNCDs). These are time deposits but have longer maturity and carry higher yields.

While these LTNCDs cannot be pre-terminated unlike regular time deposits, they are negotiable so they 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.

The bank expects to issue the P5 billion LTNCD amount in tranches over a one-year period.

Unicapital Inc. acted as lead arranger for East West Bank’s issuance. Unicapital and East West Bank also acted as selling agents.

The bank’s rationale for issuing LTNCDs is to attain better liability structure and matching of assets and liabilities. It is also anticipating higher loan growth as the bank has expanded its corporate and consumer lending organizations.

East West Bank, which listed on the Philippine Stock Exchange last May, offered LTNCDs for the first time.  However, it had inherited from AIG Philam Savings Bank—which it acquired in 2009—P1.6 billion worth of LTNCDs issued in 2007.  The LTNCDs assumed from AIG Philam Savings had matured earlier this year.