MANILA, Philippines - Ayala-owned Bank of Philippine Islands (BPI) is raising P25 billion in fresh funds through a rights offering to finance its expansion program and further strengthen its capital base.
The bank informed the Philippine Stock Exchange that its board has approved a rights offering of common shares to be offered first to certain eligible shareholders of the bank.
However, bank management has yet to approve the final terms and conditions of the rights offer, including the final issue size entitlement ratio, offer price, record date, appointment of the parties and other terms.
BPI chief financial officer Joseph Albert Gotuaco said they expect to launch the rights issue after receiving the required regulatory approvals.
He said proceeds from the issue would support the growth and strategic initiatives of the bank.
“This includes lending activities to capture the positive momentum in the Philippine economy,†he said.
The BPI official said portion of the proceeds would also be used to broaden and increase its retail channels.
Other funds that would be raised from the rights offering would also be utilized for investment towards enhancing its corporate banking and investment banking capabilities.
Gotuaco said BPI is also readying funds for possible acquisition of other banks.
“(The proceeds would also) “ensure the financial flexibility (of the bank)to consider acquisition opportunities if and when they arise,†he said.
In addition, the offer would also strengthen the bank’s capital base to preemptively address any potential additional capital requirements under the new Basel III regime.
As of end-September 2013, BPI’s market capitalization was P343 billion with a capital adequacy ratio (CAR) of 16.1 percent and a Tier 1 CAR of 14.7 percent.
The bank has appointed BPI Capital Corp. as a sole global coordinator, bookrunner and sole domestic underwriter for the rights issue.
In the first nine months of 2013, BPI registered earnings of P15.8 billion, up 19 percent from the P13.2 billion in the same period last year.
Total revenues grew 12 percent due to the improvement in net interest income brought about by the 16 percent expansion in average asset base.