BDO board OKs capital hike plan


Posted at Feb 02 2009 06:57 PM | Updated as of Feb 03 2009 02:57 AM

MANILA - Banco De Oro (BDO) Unibank, the Philippines' second-largest bank by assets, said on Monday its board approved a plan to raise $252-272 million in capital through a rights offer and Tier II notes issue.

Banco de Oro, a unit of holding firm SM Investments Corp., said the terms of both issues have yet to be finalised. The bank is one of the bidders for the remaining Philippine assets of the American International Group, once the world's largest insurer.

"The twin initiative moves will boost the Bank's capital position by 12-13 billion pesos, and improve the capital adequacy ratio to approximately 16 percent," Banco de Oro said in a statement to the Philippine Stock Exchange.

The Philippine central bank has set a minimum capital adequacy ratio of 10 percent for banks.

"We have already digested the problems resulting from the 2008 financial crisis, and they are now behind us," Teresita Sy-Coson, the bank's chairwoman said of the twin issues.

"We are looking forward to opportunities that may arise this year."

Banco de Oro has teamed up with Italy's Assicurazioni Generali SpA, and Malaysia's Kouk Group, for a possible acquisition of Philippine American Life and General Insurance Co, the local unit of the AIG group.

In May, the bank raised 10 billion pesos from an offer of unsecured subordinated debt eligible as Tier II capital.

Banco de Oro was the first Philippine bank to announce that it had $134 million of exposure to Lehman Brothers when the U.S. investment bank announced its bankruptcy in September. 

The Philippine lender had set aside 3.8 billion pesos to cover possible losses in its investments with Lehman Brothers.

The bank's net profit fell 78 percent in the nine months to September last year to 1.06 billion pesos from the same period in 2007. It posted a net loss of 1.3 billion pesos in the third quarter due to provisions set aside for its exposure to Lehman.

It had an asset base of 745 billion pesos at end September 2008.

Banco de Oro's shares closed 2.2 percent weaker on Monday, underperforming the main index, which edged up 0.46 percent.