China Banking Corp. (China Bank) is injecting P1-billion capital in the merged entities China Bank Savings Inc. (CBS) and Planters Development Bank (Plantersbank) to boost the lender’s capital adequacy to the level required by regulation.
“We will infuse P1 billion in the combined entity to meet the minimum capital adequacy ratio [CAR]. The combined CAR is 8.93 percent and our target is to have 10 percent,” China Bank Senior Vice President and Corporate Information Officer Alexander Escucha said.
The so-called Basel 3 regulations mandate all lenders to meet the global norm of 8 percent, but the Bangko Sentral ng Pilipinas (BSP) has pushed for a higher threshold of 10 percent.
The Monetary Board on August 14, approved the merger of CBS and Plantersbank, with CBSI as the surviving entity. Under the terms, the merger should have been completed within a year from BSP approval.
“It’s good to put them together first and infuse capital on the combined entity to meet the minimum CAR requirement under Basel 3,” Escucha told the BusinessMirror.
“Plantersbank branches that overlap with CBS branches will be relocated but all their personnel will be retained,” CBS President Alberto Emilio Ramos said.
CBS will secure the Philippine Deposit Insurance Corp.’s consent on its merger with Plantersbank and will submit to the BSP the articles of merger duly approved by the Securities and Exchange Commission.
China Bank posted a 14-percent increase in consolidated profits in the first six months to P2.51 billion, from P2.20 billion in the same period last year on strong growth in its core businesses. This translates to a return on equity of 8.67 percent and a return on assets of 1.06 percent.
China Bank has over 485 branches to date and on track with its plan of adding 30 more branches this year.