Equitable PCI Bank raises $130-M in Tier 2 capital

Equitable PCI Bank to raised $130 million in tier 2 capital after a series of local and international roadshows the past weeks.

Equitable PCI Bank president and chief executive officer Rene J. Buenaventura said that it is the bank’s first international issue and the largest subordinated debt issue so far in the country.

Direct presentations were done in Manila and Singapore while tele-conference calls were made to Hong Kong and London.

The bond issue has a tenure of 10-years callable after five years, with a maturity semi-annual coupon of just 9.375 percent from the original rate at the start of the road show at over 10 percent. Lead bookrunner UBS Walburg had been making calls among the local banks two weeks before the holidays while the foreign investors were courted a week before and during holidays. Deustche Bank is the joint lead manager of the bond issue.

Buenaventura said that the successful bond issue boosts the bank’s strategic plan to become truly competitive in the Philippine commercial banking system. The bank had suffered from bank runs and withdrawals after it was directly linked to the alleged illegal activities of the former administration.

"The bank has re-asserted its position in the Philippine market with its strong profitability and sound fundamental," Buenaventura said in a statement. "We are looking at double-digit growths this year especially with the bond issue for a lower tier 2 capital raising activity."

It fact, the original offer to investors was for $100 million although it had the nod of the Bangko Sentral ng Pilipinas (BSP) to go as high as $200 million. However, the demand was strong enough that it allowed the entire length or $130 million for the issue.

The fund raising exercise should allow the bank to expand its loan portfolio and securities activities, all of which would be US dollar-denominated. It would also allow the bank to increase or reinforce its loan loss provisioning.

Equitable PCI Bank reported a net income of P726.79 million last year, up by over 400 percent from the P140.18 million recorded in the whole of 2001. It was higher by 45 percent from the original target of P500 million set in early 2002.

Bulk of the huge earnings came from fee-based income, treasury investments, and low interest expenses.