BDO Unibank Inc. (BDO) on Monday said it will raise P60 billion in fresh capital through a stock rights offer to sustain growth and provide a capital buffer as a regulatory requirement of the central bank.
In a statement released by the Philippine Stock Exchange, the Sy-led bank said raising its additional core capital was approved by its board of directors.
“The fresh capital will support the Bank’s medium-term growth objectives amid the country’s favorable macroeconomic prospects, and provide a comfortable buffer over higher capital requirements with the forthcoming imposition of the Domestic Systemically Important Bank (DSIB) surcharge,” it said.
At the global level, an official list of systemically important banks (G-SIBs) categorizes such institutions because their failure or distress would impact on the global economy.
Such banks are also referred to by local regulators as domestic systemically important banks (D-SIBs) – also known as national SIFIs in Europe – because of their structural role and impact on the domestic economy.
The BSP said banks designated as D-SIBs will be required to hold additional loss-absorbency of 1.5 percent or 2.5 percent of risk-weighted assets depending on a number of factors, including size, market reliance and complexity.
The capital requirement must paid in two years starting January 2017 and must be fully in place by January 2019. By then, D-SIBs must have a minimum common equity tier 1 (CET1) ratios of 10 percent to 11 percent.
BDO said the additional capital will allow it to sustain momentum and take advantage of the country’s growth opportunities.
Over the past five years, the bank said its customer loan portfolio grew at 19-percent compounded annual growth rate (CAGR), outpacing the industry’s 17percent CAGR.
As of June 2016, BDO’s consolidated CET1 ratio and capital adequacy ratio (CAR) of 11.3 percent and 13.1 percent, respectively, were above the current regulatory minimum levels.
SM Investments Corp. (SMIC), its controlling and majority shareholder, has expressed its full support for the bank’s expansion plans and rights offer.
SMIC has committed to subscribe to its proportionate share and is willing to underwrite any shares not taken up by minority shareholders.
“Details on the proposed pricing, rights ratio and timetable will be disclosed once these are finalized,” BDO stated.