RCBC eyes P4.4B in capital

RCBC eyes P4.4B in capital

THE RIZAL Commercial Banking Corp. (RCBC) said it still needs to raise as much as P4.4 billion in capital this year even after raising P2.1 billion from a share sale to the International Finance Corp. (IFC).

RCBC President Lorenzo V. Tan told a press briefing yesterday the bank wants to raise a total of P6-6.5 billion this year to finance acquisitions and an expansion in its lending operations.

“Of the bank’s plan to raise P6 to P6.5 billion, there is a remaining P4 to P4.4 billion that we plan to raise through a share sale with a single investor,” he told reporters after RCBC, the country’s fifth largest bank, and IFC, the private sector investment arm of the World Bank, signed an agreement covering the share sale yesterday.

Mr. Tan said the share sale to raise P4-4.4 billion should take place in April at the earliest or May at the latest. He did identify the investor.

“[We are raising capital] to prepare for Basel 3, boost our organic growth as we try to open 15 branches a year and give us capital to make attractive acquisitions,” Mr. Tan added.

He pointed out the sale of 73.45 million common shares to the IFC -- valued at P2.1 billion and equivalent to a 7.2% stake in the bank -- was just the first leg of the bank’s Tier 1 capital-raising effort for the year.

Other large Philippine banks have raised Tier 1 capital in preparation for the Basel 3 standards, which were crafted to make banks stronger against stresses such as those seen during the financial crisis.

John G. Deveras, RCBC first senior vice-president and head of strategic initiatives, said IFC bought the shares at roughly P29 apiece.

RCBC shares closed at P27.50 each yesterday, 85 centavos higher than on Tuesday, when the bank disclosed its agreement with IFC to the stock exchange.

For his part, Jesse O. Ang, IFC resident representative, said “the Yuchengco Group of Companies is a prominent group not just in banking... The group has a major role in the country’s development.

We are pleased to have the opportunity to work with them.”

RCBC is a member of the Yuchengo Group.

“The fact the bank is moving into microfinance to cater to the underserved sector -- and it has a wide reach -- [makes it an ideal partner for IFC],” he added.

IFC is partnering with local banks to help these institutions expand their lending operations.

In response, Mr. Tan said “we have always considered our microfinance business to be a strong complement to the commercial bank’s lending operations.”

RCBC targets to disburse P300 million worth of microfinance loans this year, up from the P102 million released from July 2009 to December 2010.

The bank ventured into microfinance -- the first large bank to do so -- in July 2009 after buying Jose P. Laurel Rural Bank, Inc. based in Batangas in February 2009 and Merchants Savings & Loan Association, Inc., which had branches in Mindanao, in May 2008.

Asked about IFC’s plans, Mr. Ang said: “IFC is open to acquisitions and investments. We see a role in various financial institutions because they have a broad reach and they are excellent vehicles to provide credit to key populations. We will work with other institutions by investing in the form of equity or a risk-sharing facility.”

“We will look into the whole spectrum of financial players and niche institutions specializing in microfinance. We will also look at rural banks as they are closer to certain constituents we are interested in,” he added.

Mr. Deveras said “IFC’s investment brought RCBC’s Tier 1 capital adequacy ratio (CAR) to 13.4% and its combined CAR to 18.5%, well-above the central bank’s 10% minimum requirement.”

He also said the other investor expected to contribute as much as P4.4 billion in fresh capital to RCBC will claim a 13.5% stake in the bank. As a result, IFC’s holdings will be diluted to 6.9%.

Asked about RCBC’s acquisition plans, Mr. Tan said, “there is nothing [definite] but we have a few on our table... these are small banks.”

RCBC is the second large local bank where the IFC has made an investment.

IFC and the IFC Capitalization Fund invested $150 million in Banco de Oro Unibank, Inc. (BDO), the country’s largest, in April last year.

IFC has also made an investment in the Planters Development Bank.

It has also closed risk sharing agreements with BDO and the Bank of the Philippine Islands, the country’s third largest bank, for their sustainable energy finance programs. -- A. R. R. Gregorio

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