Equitable PCI Bank eyes capital market

After clearing its balance sheet, the country’s third largest bank, Equitable PCI-Bank (E-PCIB) plans to go to the capital market to further strengthen the bank, its newly installed president Deogracias Vistan said.

In a recent interview with the Far Eastern Economic Review (FEER), Vistan said the bank needs an injection of fresh capital to stay competitive with two of the country’s biggest banks, Metropolitan Bank and Bank of the Philippine Islands.

"If I’m able to clean up the balance sheet, then maybe the timing would be right to go to the capital market. I don’t have any specifics as to whether it will be a strategic partner, or public offering or a private placement, or a foreign or local group. All I’m saying is that after I address the deposit liabilities, the asset, quality, continue expense management and revenue enhancement, I cannot leave out the question of capital," Vistan told the FEER.

In recent months, E-PCI Bank scuttled plans to undertake a private placement which drew bidders such as JG Summit Holdings, Fubon Group of Taiwan, and Newbridge Capital because its shares then were trading at P40 per share. This was lower than the P90 per share level that the government pension funds, Social Security System and Government Service Insurance System, paid for their stakes in the bank.

Vistan said that despite the setback, E-PCI Bank will push through with plans to tap the market, possibly in the first half of 2002.

E-PCI Bank which become controversial for being the alleged depository bank of a fictitious account opened by ouster President Joseph Estrada to launder bribe money from jueteng, was hounded by heavy withdrawals at the height of the political crisis.

The bank suffered heavy withdrawals after its depositors took out their accounts, not wanting to be association with a "crony bank."

These heavy withdrawals prompted the Bangko Sentral ng Pilipinas (BSP) to provide an emergency loan of P30 billion.

The bank is doing better now, Vistan said, as he expressed hopes they will be able to pay the loan within the year or within the first quarter of next year.

Still, E-PCI Bank’s capital adequacy ratio, while exceeding the minimum 10 percent requirement, continues to be a concern, standing at 11.8 percent at end 2000. Vistan said that this makes the injection of fresh new capital necessary.

E-PCI Bank is 30 percent owned by the Go family, GSIS and SSS hold a combined stake of 25 percent while seven percent is owned by the Romualdez family and the rest of the shares by the public.