Chinabank sets P8-B rights offer

MANILA, Philippines - China Banking Corp. is planning to raise P8 billion through a rights offering to finance its strategic expansion program, the bank said in a disclosure to the Philippine Stock Exchange (PSE).

The bank said it has tapped Citigroup and JP Morgan as joint global coordinators, lead managers and underwriters for the rights issue.

Proceeds from the rights issue would serve as additional capital to enable the bank to pursue growth strategies, it said.

The capital raising scheme would also ensure the bank’s capital adequacy levels to remain above the new Basel III requirements, particularly in light of the recent acquisition of Planters Development Bank.

Chinabank recently purchased for P1.86 billion a majority stake at Plantersbank.

Under the share purchase agreement (SPA), Chinabank had paid P1.58 billion or 84.77 percent out of the total  amount of P1.863 billion for 100 percent of Plantersbank.

The 84.77 percent capital stock is owned by the family of former ambassador Jesus Tambunting family and related parties, and Dutch development bank FMO.

The acquisition of the remaining 15.23 percent percent common stock for P283.7 million will be through a tender offer.

“The bank’s core strategy is aimed at expanding its market position by growing risk-weighted assets with a focus on the SME and consumer segments while also extending the depth and breadth of its retail distribution,” it said.

The bank said the issuance of new shares would also help increase the visibility of the bank’s stock with investors and the trading liquidity of the bank’s common shares in the PSE.

The major shareholders of the bank, which include the SM Group, have expressed support for the stock rights offer.

At the same time, Chinabank informed the PSE that it would infuse additional P800 million to its subsidiary Chinabank Savings Bank Inc. (CBSI).

“The capital infusion is considered necessary for CBSI’s planned business growth and expansion, and to enable CBSI to meet the minimum capital requirement under Basel III,” it said.