China Bank prices rights offering at P49.50

Screengrab from www.chinabank.ph

MANILA, Philippines — China Banking Corp., which is part of the SM group, has firmed up an P8-billion stock rights offering, its first capital-raising initiative of this kind in nearly two decades, at a price of P49.50 per share.

The rights offering was priced at a discount of around 20 percent from Monday’s closing price of P62.10 per share.

China Bank, which is raising fresh core or Tier 1 capital to prepare for growth opportunities in a regime of more stringent capital adequacy regulations, has given all eligible shareholders the right to purchase one new share for every 8.834 existing common shares they hold.

According to a disclosure to the Philippine Stock Exchange on Tuesday, the bank has finalized the number of shares to be offered at 161.61 million, lower than the maximum of 275 million shares approved by its board.

The offering will run from April 30 to May 7 this year. Eligible to subscribe are shareholders of record as of April 24.

China Bank has mandated Citigroup and J.P. Morgan as joint global coordinators, joint lead managers and underwriters.

The additional capital is meant to enable Chinabank to pursue growth strategies while ensuring that its capital adequacy levels remain above the new Basel 3 requirements, particularly in light of the recent acquisition of Planters Development Bank.

Universal and commercial banks in the country have been required by the Bangko Sentral ng Pilipinas to adopt starting this year the capital adequacy standards under Basel 3, which introduces a complex package of reforms designed to improve the ability of banks to absorb losses. This new regulatory framework also extends the coverage of financial risks and puts in place stronger firewalls against periods of stress.

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