PNB to proceed with P10-B borrowing

PNB to proceed with P10-B borrowing

THE PHILIPPINE National Bank (PNB) will finally push through with a P10-billion borrowing after the central bank lifted a moratorium on the issuance of Tier 2 notes.

“The bank plans to raise unsecured subordinated debt [or lower Tier 2 debt] worth up to P10 billion in one or more tranches this year,” PNB Executive Vice- President and Head of Treasury Group Horacio E. Cebrero III told BusinessWorld in a telephone interview yesterday.

“This is to refinance the bank’s maturing lower Tier 2 debt and raise additional capital to finance [the bank’s] planned asset growth,” he added.

The Bangko Sentral ng Pilipinas imposed a moratorium on Hybrid Tier 1 and Tier 2 capital issuances lasting until Dec. 31 last year while it reviewed the kinds of capital that could be admitted under Basel 3.

The central bank then issued a circular that simplified bank capital into Tier 1 and Tier 2, with Tier 1 composed of bank equity and retained earnings plus “additional going concern” or Hybrid Tier 1 capital, and Tier 2 capital composed of just lower Tier 2 capital.

Other Philippine banks have also raised capital in preparation for the adoption of the stricter Basel 3 banking standards.

PNB has P5.5 billion worth of lower Tier 2 debt maturing in August.

Mr. Cebrero said “the first tranche would be worth P5.5 billion as we would have to refinance the P5.5 billion maturing in August.”

The size of the next issuance, he added, would depend on market conditions and the bank’s need to do so.

PNB, the country’s fifth largest bank, has already asked the Bangko Sentral ng Pilipinas (BSP)the go-ahead to issue P5.5 billion worth of notes.

“After we get the approval of the BSP, we would push through with the capital raising. That would be towards the first quarter or early second quarter,” Mr. Cebrero said.

Asked to elaborate on the bank’s plan to grow its assets, he said: “We plan to expand the bank’s balance sheet by expanding our lending or loan portfolio, be it the corporate or retail business. The bank also plans to set up branches in strategic locations.”

In a separate phone interview, PNB President Eugene S. Acevedo said “PNB plans to grow its assets across all the bank’s businesses, that is, SME (small and medium enterprise) lending, consumer and corporate lending.”

“As for the number of branches, the bank plans to add 15 to 20 more branches this year, which would be mostly located in urban areas or non-restricted areas in Metro Manila,” he added.

“We plan to put branches in CALABARZON (Calamba, Laguna, Batangas, Rizal and Quezon) or provinces close to Manila and Cebu and Davao,” Mr. Acevedo also said.

Early last month, Mr. Acevedo declared that “[the bank] is interested in acquiring either commercial or savings banks.”

PNB shares closed at P50 apiece yesterday, up from P49.35 each on Friday. -- Ann Rozainne R. Gregorio

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