BDO going back to capital mart

MANILA, Philippines - Banco de Oro Unibank Inc. (BDO), the country’s largest bank in terms of assets, will be going back to the capital markets this year to raise funds for expansion, top bank officials said.

“It will be both Tier 1 and Tier 2 capital issues,” said BDO chairperson Teresita Sy-Coson during the Annual Bankers’ Night of the Bangko Sentral ng Pilipinas (BSP) Thursday.

She pointed out that the fresh capital would be used to expand further the bank’s lending portfolio, as well as widen its loan-loss provisioning.

BDO’s gross customer loans expanded 16 percent to P424.5 billion in the first nine months of 2009. Deposits rose 12 percent to P643.8 billion, assisted by the additional branch redeployments and steady growth in low-cost deposits.

Sy-Coson added that they are optimistic the bank hit its full-year 2009 net income target of P5.5 billion, adding that the 2010 income target would likely be higher than P6.57 billion.

Meanwhile, BDO president Nestor V. Tan said the amount to be raised in the capital markets still has to be determined. “We have not finalized the amount and mix of our capital raising. We still have to consider the potential impact on our requirements of the Basel II proposals,” he explained.

The main commercial bank of the SM Group of Companies still has 40 unused branch licenses while operating 734 branches nationwide, aside from 1,200 automated teller machines (ATMs). Tan said that their plan is to utilize all the licenses by 2011, at the earliest.

Meanwhile, global industrial conglomerate General Electric Co. (GE) has decided not to exercise its right to acquire 1.5-percent equity in BDO. GE earned the privilege by virtue of its sale of GE Money Bank, the thrift bank of GE Capital, its financial services unit.

As part of the sale agreement, GE will also make a strategic investment in BDO by acquiring an equity stake of approximately 1.5 percent, with an option to further increase its holdings up to 10 percent.

Sy-Coson explained that the contract stipulated that GE has only up to the last quarter of 2009 to call its option.