BSP okays BDO’s P10-B issue

The Bangko Sentral ng Pilipinas (BSP) has approved the proposed issuance of up to P10 billion in unsecured subordinated debt by Banco de Oro Unibank Inc. (BDO), the country’s second largest lender said.

In a statement, BDO said the issuance will “qualify as lower Tier 2 capital under the relevant rules and regulations of the BSP.”

“We will raise Tier 2 capital to serve as a catapult for the (bank’s) resurgence from 2008, or the end of the integration period,” Nestor V. Tan, BDO president and chief executive officer, said in an earlier interview.

The integration process was formalized in November last year when BDO completed its acquisition of Equitable PCI Bank, then the third largest commercial bank in the country. BDO was previously ranked eighth overall in 2006.

With the merger, BDO is now ranked first in terms of total loan portfolio, second in terms of deposits, and fourth in terms of net worth. It now has a combined equity base of P56 billion.

Tan added that while the bank’s capital base is adequate, “we want to be assured as we enter new risk conditions, or acquire new assets.”

BDO still has to settle issues on what to do with thrift bank Equitable Savings Bank, the presence of two life insurance companies doing business within the premises of the over 700 combined branch network, and labor issues tied with the merger of two large financial institutions.

Recently, BDO acquired the credit card business and consumer banking services of American Express (Amex) in the Philippines.

BDO chairperson Teresita T. Sy said that the acquisition is part of their vision for long-term growth and value in the industry.

BDO recently reported a net income growth of over 25 percent from P2.5 billion in the first six months of 2006 to P3.18 billion in the same period this year.