PSBank to raise P750M through rights offering

Philippine Savings Bank (PSBank) plans to undertake a rights offer within the first semester of the year as a capital-raising initiative to raise roughly P750 million.

First Metro Investment has been tapped as issue manager for the rights offer.

PSBank is the thrift bank unit of the Metrobank group and is considered the second biggest in the industry.

"We want to be in a position to grow and take advantage of other opportunities," Pascual M. Garcia, PSBank president, said in a briefing yesterday.

Garcia said he sees bigger challenges for the banking system with the new accounting standards, new rules linked with Basel II, risk-based capital issues, and the national economic conditions.

A higher capital base is necessary to strengthen core businesses to sustain the bank’s thrusts for 2006, and that more investments are required especially in improved risk management capacities, new structures, and new technologies.

PSBank earlier launched a P2-billion unsecured subordinated debt with a 10-year tenure last December. The fresh capital pushed up the bank’s capital adequacy ratio (CAR) to 10.5 percent.

"With the rights offer, CAR could increase to over 15 percent," the bank president said.

Despite the perceived weakness in the Asian bond market, the debt offer was oversubscribed, indicating clearly improving confidence in the Philippine bond market.

Meanwhile, PSBank said its unaudited net income for 2005 grew by 32 percent, or from P485 milllion in 2004 to P640 million.

Pascual said the thrift bank is looking at a 25-percent net earnings annual growth for 2006 to roughly P800 million.

Return on equity rose to 15.1 percent after IAS compliance, despite provisioning for probable losses expanding coverage to 89 percent. Capital level is expected to reach P6 billion by end 2006 from P4 billion last year.