UBP secures approval to triple capital

Bangko Sentral ng Pilipinas. INQUIRER.net file photo

The Bangko Sentral ng Pilipinas has approved the plan of Aboitiz-led Union Bank of the Philippines to triple its authorized capital to P23.1 billion, in line with the bank’s goal to become one of the country’s top three banks by 2020.

In a disclosure to the Philippine Stock Exchange (PSE) on Monday, Union Bank said it had received an advisory from the BSP approving the expansion in authorized capital, which now stands at P6.7 billion.

At the proposed P23.1 billion in authorized capital, the bank will have 1.311 billion common shares at a par value of P10 each and 100 million preferred shares at a par value of P100 each.

The mandate from the BSP also includes that the 65 percent in stock dividends earlier approved be used to fund the 25-percent subscription to the increase of capital.

Fractional shares resulting from the stock dividend declaration will be paid in cash at P120 a share, the disclosure added.

Record and payment dates for the stock dividend will be set upon receipt of the Securities and Exchange Commission approval of the amended articles of incorporation and stock dividends and the PSE approval-in-principle of the listing of the stock dividend with the local bourse.

Meanwhile, Union Bank expects to complete soon its due diligence audit on defunct Export and Industry Bank (EIB), for which it had submitted a proposal to come in as a “white knight.”

Instead of the traditional takeover process of taking over company shares or assuming assets and liabilities, Union Bank is considering a new model for the EIB rehabilitation.

Acquisition is part of Union Bank’s overall growth strategy to boost competitiveness and likewise meet its goal of becoming one of the country’s top three largest banks in terms of market capitalization and customer coverage by 2020.

Apart from EIB, the bank is interested in bidding for the United Coconut Planters Bank.

Union Bank also recently launched an offering of Basel 3-compliant tier 2 notes. The issue size is P5 billion with an option to upsize by another P5 billion.

The Basel 3 framework requires a complex package of reforms designed to improve the ability of banks to absorb losses.