MB okays P2.5-billion corporate notes of Plantersbank

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has given the Planters Development Bank the green light to raise at least P2.5 billion through the issuance of corporate notes.

The BSP through MB has approved the planned issuance of upper tier 2 and lower tier 2 notes of up to P2.5 billion by Plantersbank aimed at raising fresh capital and expanding the bank’s operations.

Lower Tier 2 capital is supplementary capital packaged as interest-bearing notes. Claims of holders of Tier 2 debt are subordinated to those of senior creditors and depositors in the event of insolvency

Unlike straight equity, tier 2 notes, which beef up a bank’s capital, have a 10-year maturity and are usually redeemed after five years to avoid higher interest payments.

Plantersbank is one of the country’s largest thrift banks with total assets amounting to P50 billion. The private development thrift bank is capitalized at P3.5 billion as of end-June this year.

The Tambunting family who owns Planters Development Bank is looking at further increasing the bank’s 70 branches nationwide to reach more small and medium enterprises (SMEs) that are in need of funds to pursue their operations.

The fund raising activity is aimed at expanding the thrift bank’s loan portfolio that stood at P25.26 billion as of end-June this year.

The thrift bank — formerly known as Bulacan Development Bank — is focusing on SMEs that are hard pressed for funds to bankroll their operations. Large conglomerates and big companies could easily access funds from universal and commercial banks.

To pursue its expansion plan, Plantersbank is embarking on a five-year plan to lay down its strategy that would include listing at the Philippine Stock Exchange (PSE) probably in 2012.

The initial public offering (IPO) would help the thrift bank raise more capital to pursue its five-year plan.