Manila Times
Business
Written by: KRISTA ANGELA M. MONTEALEGR


EAST West Banking Corp. wants to increase its authorized capital stock to P20 billion from P8 billion to support future capital-raising program and bankroll expansion plans.

Antonio Moncupa Jr., East West president and chief executive said that the capital stock hike would include P5 billion worth of preferred shares.

"For its capital planning, the bank does not only look at common equity but is also looking into preferred shares and other non-diluting tier 1 capital," 
Moncupa said.

Once approved, Moncupa said that a capital stock of P20 billion would also be sufficient to cover requirements of a possible initial public offering,

Earlier, EastWest expressed its interest to undertake an IPO this year.

The application of the bank is subject to the approval of the Securities and Exchange Commission and the Bangko Sentral ng Pilipinas.

Filinvest Development Corp., the parent firm of EastWest, was authorized to subscribe to up to P3 billion or as much as 300 million shares from the capital stock hike, comprising P2 billion in fresh capital and P1 billion from cash dividends declared by the bank.

"We want to make sure we have the necessary capital to comply with the required assigned capital per new branch to be opened. Most importantly, we need to make sure we have adequate capital to support the risk assets when we invest the additional deposits from the new branches," Moncupa said.

The BSP recently approved the EastWest's application to put up 75 new branches in eight restricted areas of Makati, Mandaluyong, Manila, Paranaque, Pasay, Pasig, San Juan and Quezon City. The bank will also expand its presence in the provinces.

"With more deposits, we need more loans and other risk assets to deploy those deposits. With more risk assets, we need more capital to ensure that our risk profile remains not only compliant with regulatory requirements but more importantly, appropriate with the kind of risk we are booking," Moncupa said.

Despite the improved performance of its core businesses, the bank's net income slipped 6.1 percent year-on-year to P1.5 billion at end-October following a 5.1-percent decline in net revenues to P5.9 billion from last year's P6.3 billion.