Metrobank to sell off non-core assets

Moody’s pleased with move to comply with Basel III.

It said the action by Metropolitan Bank & Trust Company, the Philippines’ second largest bank, supports its Ba1 credit rating, which is one notch below investment grade.

First Metro Investment Corporation, Metrobank’s investment banking arm, sold its 20% stake in Global Business Power Corporation worth US$175 million to Orix Corporation of Japan. Moody’s said the sale is credit positive for Metrobank.

“From a strategic perspective, the transaction reflects Metrobank’s proactive efforts to dispose of non-core assets and free up capital in preparation for business growth and higher capital requirements under the new Basel III regime,” said Moody’s.

Under the Basel III framework of the Bangko Sentral ng Pilipinas, the central bank, Philippine banks must hike their Tier 1 capital to absorb shocks and not rely on capital infusions from the public.

The BSP requires a minimum Tier 1 capital ratio of 7.5% starting January 1, 2014. Basel III mandates a lower minimum Tier 1 capital ratio of 6%.

Moody’s estimated that if Metrobank retained its current stake in GBPC, its Tier 1 ratio would decline to 13.6% under the new capital regime, based on March 2013 financials.