Business World Online
Finance
August 31, 2012

The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) has green-lighted East West Banking Corp.'s (EastWest Bank) plan to issue P5 billion worth of long-term negotiable certificates of deposit (LTNCDs).

In a disclosure to the stock exchange on Friday, EastWest Bank said the Monetary Board -- the policy-setting body of the central bank -- approved the bank's plan to issue LTNCDs on Aug. 23.

The bank's board approved the issuance on May 31.

"The issuance will allow EastWest Bank to have a better liability structure and better matching of assets and liabilities," said EastWest Bank President and Chief Executive Officer Antonio C. Moncupa, Jr., in a text message on Friday.

Proceeds will also be used to finance the bank's lending business, which has been targeted grow by 40% this year from last year as EastWest Bank continues to expand its operations, he added.

"The issue size is up to P5 billion. [Minimum investment placement by interested investors is] P50,000 which [may be increased by] increments of P10,000," the bank said in the statement.

The securities, EastWest Bank said, will a have a minimum life of "five-years and one day up to a maximum of five-years and six months from the issue date."

"The maturity will give us the flexibility over the tenor that we will issue," Mr. Moncupa said.

"Inasmuch as we are very liquid and we have one year to issue, we will most likely issue it in the fourth quarter or even next year," he added.

The interest rate of the LTNCDs will be pegged on prevailing market rates once they are issued, the bank said.

EastWest shares closed at P19.56 apiece on Friday, 0.20% or 0.04 centavo higher than their P19.52 close the day before.

Unicapital, Inc. has been mandated as the arranger of the issuance.

LTNCDs, like regular time deposits, offer higher interest rates, but cannot be pre-terminated. They can be sold in the secondary market.

Other banks that raised funds through LTNCDs this year, so far, were Security Bank Corp., Rizal Commercial Banking Corp. (RCBC) and United Coconut Planters Bank (UCPB).

Security Bank in February raised P5 billion from seven-year LTNCDs that carried a 5.5% interest rate.

RCBC in April raised P1.15 billion from five-and-a-half year certificates that carried a 5.25% rate.

UCPB in May raised P1.85 billion from LTNCDs with a life of five years and three months, which carried an interest rate of 5.875%. 
-- Ann Rozainne R. Gregorio