UnionBank to raise $100M via primary share offer

Union Bank of the Philippines, the Aboitiz family’s banking arm, said it will issue $100 million worth of shares through a primary offering scheduled in April.

In a disclosure to the Philippine Stock Exchange, UnionBank said it will offer up to 90 milion shares to be taken out of its authorized capital stock of 118.75 million shares. The offer price has yet to be agreed upon between the bank and Macquarie Securities Inc., the lead manager for the proposed equity offering, after the roadshow and book-building exercise.

The shares are targeted to be listed on the week after April 30, 2007.

Proceeds from the offering will be used to enhance the bank’s capital adequacy ratio in anticipation of Basel II requirements which will be effective in July and at the same time provide funds that can be used for general corporate purposes, including working capital and investments.

UnionBank is one of the largest banks in the country, ranking seventh in terms of assets after its successful merger with smaller competitor International Exchange Bank. It is one of the most stable Philippine banks and is the host bank of the E-Card accounts of the members of the Government Service Insurance System.

UnionBank reported a net income of P581 million in the third quarter of 2006, up 39.3 percent from the previous level’s P417 million. Revenues more than doubled to P4.1 billion due to substantial increase in both interest differential and fee-based income.

Interest income from lending surged 362.2 percent to P1.6 billion as the bank’s loan portfolio more than doubled with the acquisition of iBank.

In the nine months ending September last year, however, the bank’s net profit fell to P1.6 billion compared with the year earlier level’s P1.6 billion, largely due to the expenses incurred related to the purchase of iBank and the industry-wide margin compression.

The merger between UnionBank and iBank produced synergy in the areas of technology-based products and services, lending, capital markets businesses, service quality and channels management.

The combined asset base created one of the industry’s most balanced portfolio with almost one-third each allocated to loans, securities, and interbank call loans.

Total assets stood at P146 billion, the seventh largest among private domestic universal banks while deposit base placed ninth at P102 billion. The combined network of 191 branches is now the sixth largest among Philippine banks.