Union Bank eyes LTNCD issuance to fund expansion

By Joann Villanueva

August 24, 2018, 6:07 pm

MANILA -- An official of Aboitiz-led Union Bank of the Philippines (Union Bank) announced that an issuance of Long Term Negotiable Certificate of Deposits (LTNCD) is in the offing as the bank seeks to increase capital to support its expansion.

Union Bank President and CEO Edwin Bautista said they will offer the LTNCD after they are done with the stock rights offering (SRO), pricing of which is scheduled on August 28, 2018. “We need to deploy the capital so we need to bulk up. We will be more aggressive with loans. We need to increase our deposit base again,” he said

LTNCDs are higher-yielding products with long tenors compared to regular savings accounts. It is listed with the Philippine Dealing and Exchange (PDEx).

Earlier, the bank, in a disclosure with the Philippine Stock Exchange (PSE), said they plan to issue PHP10 billion worth of additional shares.

Bautista said the plan to issue LTNCD is also in line with the implementation by the Bangko Sentral ng Pilipinas (BSP) of the Net Stable Funding Ratio (NSFR), which will be fully adopted in 2019. This new liquidity-focused rule requires big banks to have adequate liquidity to match their expected requirements for a year.

Bautista said they need to match the tenor of their long-term loans with deposits, thus, the possibility of LTNCD issuance.

He declined to elaborate on the volume and timing of issuance, noting that this will depend on how much the bank needs in the next few months. “Because if we raise too early, it will cost you money to carry. You get it too late, it will be more expensive. So it's a balancing game,” he added. (PNA)