State-owned Development Bank of the Philippines (DBP) is seeking additional capital of P10 billion to strengthen its capital ratios under the more stringent Basel-3 standards.
DBP Executive Vice President and Chief Finance Officer Susan Prado said they need to raise fresh capital by P10 billion to P22.5 billion by 2016, from the present capital of just P12.5 billion.
“DBP’s capital adequacy ratio [CAR] is pretty good but, in preparation for the Asean integration, assuming that we will not be consolidated with LandBank [Land Bank of the Philippines]—yes we would eventually need additional equity infusion from the national government,” she told the BusinessMirror.
She said the bank is well-capitalized for now, but it’s good to get the additional paid-up capital by 2016.
“We submitted our internal capital adequacy assessment plan to the Department of Finance [DOF] and the Bangko Sentral ng Pilipinas [BSP].
“We laid down our evaluation of how much capital we will need and what will happen in a worst-case scenario. We see the need for additional equity of P10 billion in 2016. That’s our request. We have to defend it before the DOF and the Department of Budget and Management [DBM],” she said.
According to Prado, the DOF, together with the DBP, will have to justify the need for additional equity at the DBM before the proposal goes through the budget-appropriation process.
“In preparation for the Asean integration, with 15-percent annual loan growth, and stringent Basel-3 capital rules, DBP definitely needs additional equity of P10 billion in 2016,” she stressed.
The authorized capital stock of the bank is P35 billion.
The bank’s CAR stood at 18 percent, while common equity Tier 1 is 12 percent to 13 percent.
This compares with the 10-percent minimum CAR imposed by the BSP.