China Bank’s early Christmas gift for stockholders

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Emeterio Sd. Perez

STARTING today, stockholders of China Banking Corp. (CHIB) will receive their 8 percent stock dividend, which translates to, more or less, 0.074 CHIB common share for every share each of them owns. To get the per-share dividend, divide 198,872,913 CHIB common shares by 2,684,770,707 outstanding CHIB common shares posted on the website of the Philippine Stock Exchange (PSE).

China Bank has increased its authorized capital stock to 3.3 billion common shares with a par value of P10 per share, from 2.5 billion common shares, to accommodate the stock dividend. When fully distributed, the bank will have 2,883,643,620 outstanding common shares.

Before the increase, China Bank had an authorized capital stock of 2.5 billion common shares, according to the bank’s general information sheet (GIS) filed with the Securities and Exchange Commission (SEC) and posted on the PSE website.

At the same time, China Bank in its 2016 annual report said the board approved on May 8, 2014 the increase in its authorized capital stock to 2.5 billion common shares from 2 billion common shares. This could mean the bank has been using its 2.5 billion authorized capital stock for over three years after it obtained the approval of regulatory authorities, such as the Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission (SEC).


Filipino-controlled

The GIS dated Oct. 5, 2017 listed China Bank’s outstanding common shares at 2,485,898,803 as of end-2016. Of these, 1,824,067,049 CHIB common shares, equivalent to 73.377 percent, were owned by 1,859 Filipino stockholders. The GIS attributed to 78 foreigners the ownership of 661,831,754 CHIB common shares, or 26.623 percent.

The remainder, totaling 14,101,197 CHIB common shares – 2.5 billion authorized capital stock minus 2,485,898,803 – would not be enough for an 8 percent stock dividend equivalent to 198,872,913 CHIB common shares.

According to the same GIS, among China Bank’s Filipino stockholders were, and still are, SM Investments Corp. (SMIC) with 344,493,881 CHIB common shares, or 13.858 percent; Sysmart Corp. with 296,604,070 CHIB common shares, or 11.931 percent; and Shoemart Inc. with 86,885,206 CHIB common shares, or 3.495 percent.

China Bank’s three significant stockholders with combined holdings of 727,983,157 CHIB common shares, or 29.285 percent, belong to the SM group, which is owned by businessman Henry Sy Sr. and his family.

Ownership profile

As of Oct. 16, 2017, the public ownership report (POR) of China Bank showed SMIC, Sysmart and Shoemart owned more CHIB common shares than what were listed in the bank’s GIS.

The bank’s GIS did not lie in the ownership entries. Said filing showed the three principal stockholders with less holding because some of the CHIB common shares they held were lodged with the PCD Nominee Corp., which acts as a record stockholder in behalf of the Sy family.

China Bank’s POR listed the three SM-owned companies as holders of 920,820,746 CHIB common shares.
These were – and still are – SMIC, 427,755,241 CHIB common shares, or 17.207 percent; Shoemart, 107,884,651 CHIB common shares, or 4.34 percent; and Sysmart, 385,180,854 CHIB common shares, or 15.495 percent.

Subtracting 727,983,157 CHIB common shares as shown in the GIS from the POR’s 920,820,746 CHIB common shares, equals a difference of 192,837,589 CHIB common shares, or 7.757 percent.

By the way, this kind of ownership reporting is not a monopoly of China Bank. Other listed companies do likewise but not with the intention of hiding the missing numbers.

8% stock dividend

In a letter dated Sept. 29, 2017, China Bank informed the PSE of having received the SEC approval of the increase in its authorized capital to P33 billion from P25 billion. In terms of common shares, the expanded authorized capital is equivalent to 3.3 billion CHIB common shares based on a par value of P10 per share.

In an amended filing dated Oct. 27, 2017, China Bank said it needed to increase its authorized capital stock to accommodate the additional 198,872,913 CHIB common shares.

The bank said in the same filing that 198,872,913 CHIB common shares represent the “total number of shares to be issued inclusive of fractional shares” arising from the declaration of an 8 percent stock dividend.

To get China Bank’s new outstanding capital stock, add 198,872,913 CHIB common shares and the present outstanding capital stock of 2,684,770,707 CHIB common shares. The addition would result in 2,883,643,620 CHIB outstanding common shares.

Additional computation showed 8 percent of 2,684,770,707 outstanding CHIB common shares were equivalent to 214,781,656.56, while 198,872,913 additional CHIB shares to be issued were equivalent to 7.407 percent of 2,684,770,707 CHIB outstanding common shares.

By the way, will other listed companies follow China Bank in declaring a stock dividend? Some of them even portray the public as their majority stockholders, but who have no board seat? Just asking.

esdperez@gmail.com

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