AUB raising P2B from new offering

Asia United Bank has rolled out a P2-billion fund-raising program from the sale of high-yield deposit instruments, joining the bandwagon of banks aiming to attract cash-awash investors.

In a disclosure to the Philippine Stock Exchange on Wednesday, AUB announced the signing of an agreement with British bank HSBC for the latter to act as the sole arranger, bookrunner and selling agent for the first tranche of up to P2 billion in long-term negotiable certificates of time deposits (LTNCD).

“The issuance will enable AUB to boost its lending activity as it aggressively expands its network nationwide, which currently stands at 142 branches,” the bank said.

AUB’s offering will have a term of five years and three months. Interest rate was set at 3.5 percent a year, payable on a quarterly basis. The LTNCDs are available for a minimum investment of P100,000 with increments of P10,000 thereafter.

The bank’s offering started last Nov. 25 and will run until Dec. 6.

LTNCDs are time deposits but have longer maturity and carry higher yields. By using the LTNCD structure, which is tax-free because of the long tenor, banks can offer better yields to clients.

Banks typically offer LTNCDs to attain better liability structure and matching of assets and liabilities. It is also an alternative way of raising funds to expand risk assets.—Doris C. Dumlao