First Metro handles P7.4-B

First Metro Investment Corp. (First Metro) is the country’s investment banking industry’s leader with a P7.4-billion capital base. First Metro is the investment arm of the Metropolitan Bank and Trust Co. (Metrobank).

The company accomplished this feat despite a challenging economic backdrop where the Philippine financial industry continuously experienced bleak prospects since the onset of the Asian financial crisis. Non-performing loans (NPLs) of the banking system reached all-time highs as corporate debt ballooned brought about by the plunging peso and the volatility in interest rates. Asia’s once best performing stock market, meanwhile, plummeted to alarming levels as volume turnover dried up.

Despite this scenario, First Metro harnessed the benefits of judicious consolidation thus strengthening its ability to maintain its leadership position in the industry.

It helped somewhat when it went public in 2000 merging with Solidbank, one of the medium-sized banks acquired by Metrobank.

Abacus banking analyst Bernard Avinante said the stock price of the company fared well for year 2002 relative to the benchmark Philippine Stock Exchange index or Phisix. Over this period, the counter was only down by four percent compared to the Phisix’s measly performance of about 15 percent.

The company is also geared to face a protracted economic recovery given its superb capital adequacy ratio (CAR) of over 20 percent, while keeping its doors open for pockets of opportunities. Currently, First Metro has embarked on several notable capital raising deals.

Though specializing in investment banking services, First Metro also engages in treasury operations and investment advisory activities.

For instance, the Philippine Postal Corp. (Philpost) gave the investment bank the mandate to serve as financial adviser and lead arranger of the state company’s planned issuance of P5-billion worth of five-year zero-coupon bonds. It actually has a greenshoe option to raise its bond offering to P8 billion depending on investor appetite for the debt instruments.

It is also looking at securing a guarantee from the National Government. To enhance the offering, First Metro is also in talks with the Japan Bank for International Cooperation (JBIC) for a similar guarantee.

It will also underwrite a P1.5-billion bond offer by the AMA Education Corp. and AMA Computer University Inc., making the first IT-related bond issuance in the country this year.

Last year, it led various capital-raising activities with a total of P75 billion for both government-run and private corporations, making First Metro the most active and largest investment bank last year not only in terms of capital but capital raised as well.