DBP to expand network base nationwide

State-owned Development Bank of the Philippines (DBP) is poised to expand its network base across the country, at the same increase its credit offer to the Micro-Small and Medium Enterprises (MSMEs) this year.

In an interview with DBP president Reynaldo G. David, he said that the bank will establish 10 more Business Assistance Centers (BACs), specifically in Visayas and Mindanao areas.

In Cebu, about three of four BACs will be opened probably within this year, to provide easier accessibility of products and services offered by the bank to the mainstream market.

Aside from BACs, David said DBP is also planning to open a full branch outlet in other parts of Metro Cebu, to add to its existing two branches here, located in Cebu City and Mandaue City.

Aside from branch expansion, DBP is also putting additional amount for its loan offer to MSMEs, that would reach at least P50 billion this year.

About P10 billion of the total P50 billion will be allocated to the micro lenders, which will be offered by DBP through its conduit rural banks and micro-finance institutions.

While about P30 billion to P40 billion will be dedicated for SMEs, he said.

David, along with other DBP officials, was in Cebu recently for the bank’s Tier 2 notes offering to the Cebuano market.

DBP, the fourth largest bank in the Philippines, sets out on an aggressive campaign for its issuance of up to P7.65 billion tier 2 or supplementary capital notes with an investors briefing in Cebu, held recently at the Crown Regency Hotel.

The lower tier 2 or subordinated noted will mature in 10 years and is subject to optional redemption by the issuer after five years. The minimum denomination is P500,000, with increments of P100 thousand thereafter.

DBP has appointed Deutsche Bank, First Metro Investment Corporation, and Hong Kong Shanghai Banking Corporation (HSBC) as joint lead managers for the issuance.

Issue date will be September 1, 2008, with maturity on September 2018. The issuance will complete DBP’s P10 billion fund-raising effort initially launched in 2006 to further boost the bank’s development programs for infrastructure, environment, social services, and MSMEs.

DBP’s tier 2 notes in 2006 marked the first time a government financial institution issued capital notes.

According to David, proceeds of the debt issue will also enable the bank to comply with capital adequacy ratio requirements, while providing investors with an attractive alternative to deposit products and other debt securities.

“The interest rate will be based on the five-year government benchmark and this interest rate will apply in the first five years. The interest rate will then step up on the fifth year by the bank has an option to redeem the notes,” David added. – Ehda M. Dagooc