BSP Oks UnionBank’s P6.8 billion debt buyback

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has given Union Bank of the Philippines the green light to repurchase its P6.8 billion debt ahead of schedule.

In a regulatory disclosure, UnionBank said it has received approval from the BSP to exercise its voluntary redemption option for its P6.8 billion worth of unsecured subordinated debt, classified as Tier 2 capital, scheduled on May 24.

UnionBank said it would notify investors who hold these debts before the redemption date, following banking rules.

Subordinated debt, or also known as a subordinated debenture, is an unsecured loan or bond that ranks below other, more senior loans or securities with respect to claims on assets or earnings. These instruments qualify as Tier 2 capital, which helps banks maintain financial stability and meet regulatory capital requirements.

Banks typically redeem these debts early when they have a stronger financial position or when refinancing with lower-cost capital becomes a better option. For investors, early redemption means they will receive their principal investment back sooner than expected.

The earnings of the Aboitiz-led bank surged by 30.4 percent to P12 billion in 2024 from P9.2 billion in 2023 on the back of strong margin expansion and higher fee-based revenues.

Net revenues increased by 12.4 percent to a record-high of P79.5 billion in 2024, driven by a strong consumer business, higher margins as well as customer transaction fees.