ROBINSONS BANK Corp. has started its offer of long-term negotiable certificates of deposit (LTNCD), which it plans to list on July 16.
At its investors briefing on Thursday, the Gokongwei-led lender said it began offering the first tranche of its peso-denominated LTNCDs yesterday, with the offer period set to end on July 9.
The instruments will mature in 5.5 years and carry an interest rate of 4.875% to be paid quarterly.
“Our application is to issue a total of P5 billion which can be done in one to two tranches,” Robinsons Bank President and Chief Executive Officer Elfren Antonio S. Sarte told BusinessWorld.
“That flexibility allows us that if we don’t reach the [amount] that we are happy, we can offer [another tranche] within a year to complete the P5 billion.”
Like regular time deposits offered by banks, LTNCDs offer higher interest rates. However, LTNCDs cannot be pre-terminated but can be sold on the secondary market, making them “negotiable.”
Mr. Sarte said the proceeds of the fund-raising activity will be used to support the lender’s loan growth this year.
“As we project, our guidance will increase by about 30% in terms of assets. A lot of the asset growth will be coming from additional loans both in the commercial and consumer areas. That is really the reason why,” Mr. Sarte said.
“We’re ensuring that our leverage or liquidity coverage ratio will continue to be healthy so that we can continue to grow both lending out long with the LTNCD and the capital diffusion. That will strengthen our liquidity and funding sources.”
ING Bank N.V. (Manila branch) will serve as the sole arranger and bookrunner for the fund-raising activity. It will join Robinsons Bank as a selling agent.
In June 2017, Robinsons Bank raised P4.182 billion from its first-ever LTNCDs, more than the initial P3 billion offer size, on the back of strong demand.
Aside from the P5 billion Robinsons Bank is eyeing to raise, its parent companies, JG Summit Holdings, Inc. and Robinsons Retail Holdings, Inc. will infuse P3 billion in fresh capital into the bank next month. Broken down, JG Summit will inject P1.8 billion in additional capital and the remaining P1.2 billion will be from Robinsons Retail.
Earlier this year, Robinsons Bank signed a bancassurance deal with British life insurer Pru Life UK to bolster the bank’s product offerings.
The three-year partnership of Robinsons Bank and Pru Life UK is expected to generate approximately P40 million to P50 million in premiums in the first year.
As of end-2017, Robinsons Bank was 19th biggest commercial bank in asset terms with P103.1 billion, central bank data showed. — Karl Angelo N. Vidal