Banco de Oro braces for Basel III

Banco de Oro Unibank, Inc intends to raise at least US$200 million in Tier 1 Capital this year.

The bank is  to comply with the far stricter global capital adequacy requirements under Basel III.

The Philippines’ largest bank, however, is still waiting for the appropriate time to do so, said President Nestor Tan.

He said the US$200 million figure was not final and the exact amount depends on changes in the Basel III regulatory requirements and the expectation of loan growth BDO will match with an increase in funding.

Universal and commercial banks are required to adopt Basel III by Jan. 1, 2014. Basel III strengthens bank capital requirements and introduces new regulatory requirements on bank liquidity and bank leverage.

Basel III requires banks to hold 4.5% of common equity (up from 2% in Basel II) and 6% of Tier I capital (up from 4% in Basel II) of risk-weighted assets.

In 2011, BDO’s capital adequacy to risk assets ratio improved to 15.8% from 13.8% year-on-year.

With assets of US$23 billion, BDO is the Philippines’ largest bank.