Philippine banks to enforce most Basel III reforms

Are vying to be among the first Asian banks to price Basel III-compliant subordinated debt.

Metropolitan Bank & Trust Company, the second largest lender, said it is seeking shareholder approval for an increase in share capital to give it room to issue subordinated debt in the future.

Shareholders last March approved a proposal to double Metrobank’s capital stock to US$2.44 billion via an offering of 1.5 billion common shares and 1 billion non-voting preferred shares in the future.

The bank said the proposed increase in authorized capital stock gives it the flexibility to issue Basel III-compliant Tier 2 notes in the future. Government guidelines require Tier 2 notes to have a provision for the instrument to be either written off or converted to common equity upon occurrence of certain trigger events.

Rizal Commercial Banking Corporation, the fifth largest bank by assets, is finalizing a US dollar hybrid Tier 1 plan incorporating Basel III rules.

RCBC is expected to raise US$130 million in a deal after planned roadshows in May. It will be one of the first Asian hybrids to incorporate covenants requiring investors to take losses if the bank runs into trouble and becomes non-viable.