BDO to sell P5 B worth of preferred shares

Banco de Oro Unibank Inc. (BDO) is planning to sell P5 billion worth of preferred shares from September to November this year to strengthen its capital base.

In a disclosure to the Philippine Stock Exchange, BDO, the country’s second-largest bank by assets, said that it would offer 500 million voting, non-cumulative, non-participating Series A perpetual preferred shares at an issue price of P10 each.

BDO said the shares, which are convertible into common shares in three years from issue date, qualify as Tier 1 capital. They carry a fixed dividend rate of 6.5 percent per year.

The proceeds from the issuance would be used to augment its capital and support its expansion, the bank noted.

Earlier this year, BDO issued P10 billion worth of unsecured subordinated debt notes. The issue, which is also eligible as Lower Tier 2 capital, carried a coupon rate of 8.5 percent per annum at 100 percent of face value. The issue was priced tightly against five-year government bonds.

Meanwhile, the Securities and Exchange Commission has approved the merger of two of BDO’s wholly owned insurance brokerage units, BDO Insurance Brokers Inc. and EBC Insurance Brokerage Inc., with the former as the surviving entity.

“The merger of these subsidiaries is in line with the bank’s policy of streamlining its organization and operations.” BDO said.