Metropolitan Bank & Trust Corporation is doubling its authorized capital stock to comply with Basel III requirements as well as for the issuance of a stock dividend worth P12.7 billion.
In a disclosure to the Philippine Stock Exchange, the bank said its board of directors has approved the declaration of a 30 percent stock dividend representing more than 633 million common shares.
The Metrobank board also approved the amendment to its Articles of Incorporation to increase the authorized capital stock from P50 billion to P100 billion. The stock dividends will be issued out of the increase in authorized capital stock.
The increase will be divided into 1.5 billion common shares and 1.0 billion preferred shares, each with a par value of P20 per share.
The preferred shares shall be non-voting except as provided by law and shall have preference over common shares in the distribution of dividends. Other specific terms and conditions of the preferred shares shall be determined at the time the Bank decides to issue the said shares.
"The proposed increase in authorized capital stock gives Metrobank flexibility to issue Basel III-compliant Tier 2 notes in the future," the bank said.
The Basel III guidelines issued by the Bangko Sentral ng Pilipinas (BSP) on January 15, 2013 requires that Tier 2 notes have a provision for the instrument to either be written-off or converted to common equity upon occurrence of certain trigger events.
The BSP circular further stipulates that banks must make the necessary amendments to its Articles of Incorporation to accommodate such a conversion.
Based on audited financial statements at the end of 2012, Metrobank reported total equity of P120.0 billion and total capital adequacy ratio (CAR) of 16.3 percent with Tier 1 CAR at 13.7 percent.