PHILIPPINE Savings Bank (PSBank) plans to issue medium-term notes of up to P10 billion to raise fresh funds to expand its core businesses.
In a disclosure on Friday, the thrift banking arm of listed Metropolitan Bank & Trust Co. said its board of directors, in its Sept. 20 meeting, approved the lender’s request to issue medium-term fixed and/or floating rate notes of up to P10 billion.
The issuance “will give PSBank an opportunity to access medium-term and stable funding as the bank further expand its consumer banking business,” it said on Friday.
Local banks have been conducting various fundraising activities ahead of tighter risk management requirement by the central bank which will take effect next year under the international Basel 3 standards.
Last month, Bank of the Philippine Islands raised $600 million through a drawdown from its $2-billion notes program, which fetched a 4.25% coupon.
Philippine National Bank and Rizal Commercial Banking Corp. have also tapped the foreign debt market this year, raising $300 million and $150 million, respectively, from their own medium-term note facilities.
Currently, banks prefer issuing long-term negotiable certificates of deposit (LTNCD) to raise additional funds. However, these actually entail bigger costs compared to soliciting other forms of investments as these are actually time deposits and come with a higher reserve requirement rate.
PSBank earlier raised P5.0845 billion from the first tranche of LTNCD program, which it wants to use to expand its consumer banking segment.
The notes will mature in five years and six months and carry an interest rate of 5% to be paid quarterly.
PSBank’s board of directors approved the issuance of up to P15 billion worth of LTNCDs. The offerings will be conducted over a year in two or more tranches.
LTNCDs are similar to regular time deposits which offer higher interest rates but cannot be pre-terminated. Being “negotiable” means these can be sold at the secondary market prior to maturity date. — BFVR