Unionbank raises ₧40B from SRO, to use proceeds in Citigroup acquisition
UNION Bank of the Philippines (UBP) listed its stock rights offer (SRO) shares at the Philippine Stock Exchange (PSE) last Monday. The P40 billion raised from the SRO will be used by the bank to pay for its acquisition of the Philippine consumer banking business of Citigroup Inc.
In his welcome remarks, PSE President and CEO Ramon S. Monzon cited the bank’s acquisition of Citigroup’s local business. He said, this “will turbocharge UBP’S expansion in the retail banking space.”
Monzon, likewise, mentioned UBP’S receipt of a digital banking license.
“This is not surprising considering UBP’S proven track record as a forward-thinking bank that is constantly pushing the tech envelope forward,” he added.
Union Bank of the Philippines’ acquisition of the consumer banking arm of Citi Philippines will bode well for the local lender’s short and long term prospects, an international research firm said last January.
Creditsights, which was acquired by the Fitch Group, said the move is a “meaningful acquisition for a bank the size of Unionbank” and would not have been made possible if not for the strong corporate backing of the bank via the Aboitiz Group.
The think tank also said their internal calculations showed that Unionbank’s acquisition of Citi will take the bank’s common equity tier (CET) 1 ratio down to approximately 13.5 percent.
“While capital levels almost certainly will not fall below regulatory minimums as that would mean not getting the blessing of regulators, the acquisition looks set to leave the bank with a relatively thin capital buffer post-transaction, even with the large support from its shareholder group,” the think tank said.