Citystate Savings seeks FCDU license

Medium-sized thrift bank Citystate Savings Bank is seeking foreign currency deposit unit (FCDU) and unit investment trust fund (UITF) licenses from the Bangko Sentral ng Pilipinas (BSP).

With these licences, the bank can offer more banking and investment products to the banking public.

Just last month, Citystate was issued a government securities eligible dealer (GSED) license by the Bureau of Treasury (BTr), enabling it to participate in the electronic auction of government securities with other banks and non-bank financial institutions through the automated debt auction process system (ADAPS).

Government securities are in the form of Treasury bills (T-bills) and Treasury bonds (T-bonds). The BTr sells these securities to the investing public through a network of licensed dealers.

Citystate president Alfred A. Cabangon said the additional licenses will be applied shortly after its stock rights offering.

"The fund-raising activity, which would increase Citystate’s capital base to about P700 million, is in step with the overall plan of the bank management to obtain the FCDU and the trust licenses," Cabangon said during the opening of Citystate’s Shaw branch.

A stronger capital is a prerequisite for bank’s to offer a basket of financial services.

Proceeds of the rights offering is estimated to reach P220 million. If the reception is exceptional, the thrift bank will consider a higher volume. Listing date has been set on Oct. 31.

Last month, Citystate informed the Philippine Stock Exchange of its plan to offer 22.05 million common shares by way of a stock rights offering to existing shareholders at an exercise price of P10 per share.

The offering represents 33.33 percent of the bank’s outstanding common shares. To date, 44.1 million common shares of the bank have been issued.

After the completion of the rights offering, Citystate’s issued and outstanding common shares will stand at 66.15 million.

Under its terms of offering, the rights shares may be subscribed to by the shareholders but subject to the limits prescribed by the authorities on ownership or shareholdings applicable to thrift banks and by Philippine laws on foreign ownership applicable to the bank.

This specification is important because Citystate has Citystate Holdings Pte. Ltd., a Singaporean investment and financial holdings corporation, as its principal foreign shareholder group.

Securities Transfer Services Inc. is the receiving agent while United Coconut Planters Bank (UCPB) as the trustee bank.

Citystate plans to use the proceeds of the offer for its branch expansion for an additional 38 branches from its present 12 within the next three years. Aside from its Shaw branch, it plans to open within the year one in Quezon City and another in Bulacan.

The bank’s expansion program has already been submitted to the BSP which prefers that banks that are opening branches catering to microentrepreneurs and SMEs.