SBC offers P10B Tier 2 notes

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Sunday, June 22, 2014

SECURITY Bank Corp. on Friday announced it has started offering up to P10 billion Basel III-compliant Tier 2 notes.

The offer period will run from June 19 to July 3, with settlement and issue date slated on July 11, 2014.

Based on the briefer, the notes will mature after 10 years on July 11, 2024, while the bank has the option to call after five years on July 12, 2019.


In an interview during the bank's Tier 2 Investors presentation at the Marco Polo Davao, SBC president Alberto S. Villarosa said they are offering the Tier 2 notes to strengthen the bank's capital base in a bid to withstand competitions.

He added any investors can buy the notes at a minimum of P500,000 with increments of P100,000 as approved by the Bangko Sentral ng Pilipinas (BSP).

He said any individuals who hold it for five years plus one day after the issuance date can have the equivalent of 5.375 percent per anum of the amount invested.

Raul Martin Pedro, treasurer of SBC's treasury group, explained they are issuing Tier 2 notes to float its capital ratio.

"Regulators say additional capital can be in a form of more Rier 2. We're putting in more tier 2 so that we can now lend more because we would have a higher capital ratio," he said.

However, Pedro said citing BSP rule that 80 percent of that P10 billion will be counted as capital should the bank choose not to call by 2019.
"The BSP will not recognize the whole P10 billion beyond 2019, babawasan ng babawasan," he explained.

For his part, Villarosa added the Tier 2 notes issuance will allow flexibility to grow loan portfolio. For one, so that SBC will have a better capital ratio and be better prepared with competitions, especially now that Senate Bill No. 2159, "an act liberalizing the entry and scope of operations of foreign banks in the Philippines" is now being taken up.

"We do not actually need the tier 2 now. Our capital adequacy ratio is 14 percent vs the requirement of 10 percent, so we have a 40 percent more. Our philosphy has always been when we do not need it, we do it," he said.
Villarosa added investors will most likely come from SBC's existing depositors.

SBC has tapped Deutsche Bank, Hongkong and Shanghai Banking Corporation Limited (HSBC), and Standard Chartered Bank as joint lead arrangers and selling agents.

Davao City is also being considered as one of the important areas of Security Bank, along with General Santos City and Cotabato City, with a total of 18 branches in Mindanao.

Published in the Sun.Star Davao newspaper on June 23, 2014.


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