EastWest to borrow P5B to boost capital

Gotianun-led EastWest Bank on Monday started an offering of up to P5 billion in debt notes qualifying as Tier 2 or supplemental capital under Basel 3 banking framework.

The Tier 2 notes may be issued in one or more tranches within a period of one year from the date of approval by the Bangko Sentral ng Pilipinas, based on a disclosure to the Philippine Stock Exchange on Monday.

The offer period will run until June 27, with the initial issue date on July 4 this year.

The debt notes will have a term of 10 years and six months, with an early redemption by the issuer set as an option after five years and five months.

“The bank is issuing the Tier 2 notes to raise additional Basel 3 qualifying capital to support its growth plans,” said Manuel Goseco, EastWest Bank senior vice president and treasurer said.

Investors may purchase the Tier 2 notes in minimum denominations of P500,000, in increments of P100,000.

Interest will be paid out quarterly.

Deutsche Bank, HSBC, Standard Chartered and Unicapital were mandated as the joint lead arrangers of the Tier 2 offering and will also act as selling agents.

For its part, EastWest Bank will be a limited selling agent, and Multinational Investment Bancorporation will act as the issue’s market maker and selling agent.

The Basel 3 requirements took effect on January 1 this year. This framework introduced a complex package of reforms designed to improve the ability of bank capital to absorb losses, extend the coverage of financial risks and have a stronger firewall during periods of stress.

A subsidiary of publicly listed Filinvest Development Corp., EastWest has capitalized on parent company’s other business interests in real estate development, banking, hospitality and tourism, power-generation and sugar to grow its banking portfolio.

Incorporated as a commercial bank in July 1994, EastWest Bank has been upgraded as a universal bank in 2012, and has since then emerged as one of the country’s fastest growing banks.

EastWest is the 10th largest private domestic bank in terms of assets. It is also the fifth largest financial institution in terms of credit card receivables and one of the biggest in auto financing.

As of end-March this year, the total assets of EastWest stood at P153.8 billion with a gross total loan portfolio of P102 billion. Its capital adequacy ratio and Tier 1 ratio stood at 12.2 percent and 11.3 percent, respectively. Doris C. Dumlao