BDO eyes fresh funds to boost capital, finance acquisitions

MANILA, Philippines- Sy-led Banco de Oro Unibank is going back to the markets to boost its capital and fund prospective acquisitions. In a statement, BDO said it received board approval to raise funds through a rights offering and a Tier 2 note issue. "The twin initiatives will boost the bank's capital position by P12 - P13 billion, and improve its capital adequacy ratio (CAR) to approximately 16 percent," BDO said. Teresita Sy-Coson, BDO chairperson, said the bank has already put behind it the "problems resulting from the 2008 financial crisis". "We are looking forward to opportunities that may arise this year," she said. In the third quarter of 2008, BDO reported P1.3-billion in losses "primarily by the provisions set aside for the bank's exposure to Lehman Brothers," which declared bankruptcy in September. BDO is among the groups which signified interest to acquire insurance giant Philippine American Life and General Insurance Co. (Philamlife). Philamlife was among the assets that would be sold by ailing American International Group to partly fund payment for its $150-billion debt to the US government. BDO said it will partner with Generali Group for the acquisition of Philamlife. Currently, the SM Group—which controls BDO—is already in a joint venture with Assicurazioni Generali, considered as the largest insurance company in Italy and Europe, and the Kuok Group of Malaysia for Generali Pilipinas. The SM Group owns 60 percent of Generali Pilipinas. SM Investments Corp., the holding company of the Sy family and a majority shareholder of BDO, said it maintains its positive outlook on the bank. "SMIC, as a majority shareholder of BDO, continues to be bullish on BDO and the Philippine banking industry. We believe the current situation presents opportunities for the Bank to further consolidate its position," Jose Sio, SMIC chief financial officer said. BDO added that the terms of the notes and the rights offering will still be finalized. With an asset base of P745 billion as of September 30, 2008, and network of over 700 branches and over 1,200 ATMs, BDO is one of the Philippines' largest banks. GMANews.TV