Security Bank borrowing plan OKd

MANILA, Philippines—The Bangko Sentral ng Pilipinas has approved Security Bank Corp.’s plan to raise up to P5 billion through the issuance of long-term deposits.

Deutsche Bank AG Manila Bank and Standard Chartered Bank were named joint lead underwriters for the planned offering of long-term negotiable certificates of deposit (LTNCDs).

In a disclosure to the Philippine Stock Exchange on Tuesday, Security Bank said it would accept a minimum LTNCD placement of P50,000 with increments of P1,000. The instrument will have a minimum maturity of five years and three months and a maximum tenor of seven years.

LTNCDs are time deposits but have longer maturity and carry higher yields. While they cannot be pre-terminated, unlike regular time deposits, they are negotiable so they can be sold in the secondary market to other investors.

By using the LTNCD structure, which is tax-free because of the long tenor, banks can offer better yields to clients.

With the issuance of LTNCDs, Security Bank plans to build up its deposit base and strengthen its balance sheet by having longer-term liabilities in its books.

Security Bank grew its net profit in the first nine months of this year by 21 percent year on year to P4 billion on the back of a double-digit rise in interest earnings and loans. This allowed the bank to maintain a return on equity of 20 percent, which was higher than those of most of its peers.