China Bank to enter stock brokerage business

SY family-led China Bank plans to venture into the stock brokerage business and set up a special purpose vehicle for securitization as part of efforts to diversify its revenue stream.

The two new units – which will make China Bank a more active participant in the capital market – will be folded into the bank’s investment house China Bank Capital Corp. (CBCC).

China Bank Capital is looking to acquire and rebrand an existing stock brokerage. The stock brokerage house will be named China Bank Securities Corp., China Bank told the Philippine Stock Exchange on Thursday.

“As a wholly owned subsidiary, it will enable China Bank Capital to do initial public offerings (IPOs) and list these IPO shares in the PSE (Philippine Stock Exchange),” China Bank said in a press statement.

“China Bank group’s clients will also stand to benefit as they will have access to the stock brokerage service for their equities-related transactions,” the bank added.

Meanwhile, the special purpose corporation to be known as CBC Assets One (SPC) Inc., will be utilized as a vehicle to hold the assets for the securitization transactions of China Bank Capital.

Early this year, China Bank Capital was mandated by publicly listed mass housing developer 8990 Holdings Inc. to be the arranger and lead underwriter for the P5 billion securitization of contract to sell (CTS) receivables of its various subsidiaries. When completed, this will be the largest securitization transaction in the country.

Securitization is the process of turning receivables into marketable securities. In this case, the 8990 Holdings’ receivables will be purchased by CBC Assets One (SPC) Inc. and repackaged into fixed-income securities. “This is an innovative approach by China Bank Capital to address the financing requirements of the low cost housing industry,” the bank said.

“The addition of these two new subsidiaries to China Bank Capital’s portfolio will round out its offerings and help improve its capabilities on the capital origination side,” the bank said.

The stock brokerage will have an initial capital of P100 million while the securitization arm will be initially capitalized at P5 million.

China Bank is the country’s first privately owned local commercial bank and now one of the largest private universal banks in the Philippines providing a full range of banking products and services to corporate, commercial, and retail customers through over 500 branches nationwide (includes thrift bank subsidiary, China Bank Savings CBS). The bank also recently won a “Bell Award for Corporate Governance” for the fourth year in a row. It is again the only bank among the awardees in the publicly listed company category and the only awardee to have won in all Bell Awards since it was launched by the Philippine Stock Exchange in 2012.