UnionBank ready to inject capital into UnionDigital
Union Bank of the Philippines is prepared to inject fresh capital into its digital banking unit, UnionDigital Bank, if the Bangko Sentral ng Pilipinas (BSP) rejects its request for regulatory relief as the lender moves to absorb the subsidiary.
Speaking to reporters on Wednesday, UnionBank president and CEO Ana Maria Aboitiz-Delgado described the bank’s request to the central bank as merely a “procedural item,” signaling that the lender was prepared to proceed with a capital infusion if necessary.
It may be recalled that UnionBank had asked the BSP to waive the requirement for an additional capital injection into UnionDigital, arguing that the planned integration of the digital bank into its parent would make such a transfer unnecessary.
“The capital is in UnionBank, so we’re ready to infuse it anytime,” Aboitiz-Delgado said.
The Aboitiz-led lender had also asked the BSP to exclude its equity investment in UnionDigital from the calculation of its regulatory capital ratios. It argued that deducting the investment would “not reflect the economic substance of the integration.”
High-quality capital
Capital adequacy rules require banks to maintain sufficient high-quality capital to absorb unexpected losses, protect depositors and safeguard financial stability.
Regulatory filings showed that UnionBank would acquire certain assets and assume certain liabilities of UnionDigital. The transaction is expected to be completed by April 2027.
UnionDigital became the Philippines’ fourth digital bank in 2021 after securing a license from the BSP.
Since then, however, the virtual lender, like most of the country’s digital banks, has yet to turn a profit. Aboitiz-Delgado said the long path to profitability was not the reason behind the planned integration.
“This is for us an opportunity to bring together actually the strengths from all of our subsidiaries in Union Bank, which probably already has more digital capabilities than any of our subsidiaries,” she said.
“This is part of strengthening that proposition and then deriving efficiencies,” she added.
Separately, UnionBank is also planning to integrate its financial technology unit, UBX Philippines Corp., into the parent company.
Under the proposed arrangement, UnionBank will take over selected UBX assets, with the transaction expected to be completed by the end of November.
