July 24, 2014

Metrobank to raise P20b from LTNCD issue

Metrobank (MBT, Buy) yesterday disclosed that it received board approval to issue P20b worth of long-term negotiable certificates of deposits(LTNCDs). This follows the early closing of the bank’s Series 2 of Tier 2 Notes worth P6.5b, bringing the bank’s total Basel 3 compliant Tier 2 debt to P22.5b.

Our take: The deposit-raising via LTNCDs is the bank’s attempt to lock-in the funding costs of certain high-yielding loans in its portfolio. Similarly, the completion of the bank’s Tier 2 program within just 7 months after Basel 3 implementation is an opportunistic move to raise regulatory capital in a low-interest rate environment.

Further, the additional deposits from the LTNCDs and the newly-raised Tier 2 debt will ensure that the bank will have sufficient funds to support its growth initiatives.– WealthSec