RCBC to raise $200M from equity, debt deals
THE RCBC Plaza. INQUIRER FILE PHOTO
MANILA, Philippines—Rizal Commercial Banking Corp. plans to beef up its capital by over $200 million to support future growth through a mix of equity and debt offerings this year.
In a disclosure to the Philippine Stock Exchange on Tuesday, RCBC said it would issue peso-denominated debt notes that would qualify as tier 2, or supplementary capital, under the Basel 3 capital adequacy ratio (CAR) framework.
The bank is looking to raise P5 billion, or about $111 million, from the offering of subordinated notes, RCBC executive vice president and head of strategic initiatives John Thomas Deveras said in a text message.
Later this year, RCBC will raise at least $100 million more from the sale of new common shares, Deveras added.
“We want to raise more capital for future organic growth and acquisitions,” he explained.
There is no fixed amount yet, but an equity deal worth of at least $100 million will be worked out within the year, Deveras said.
The bank expects to secure regulatory approvals right away, enabling it complete the estimated P5-billion tier 2 offering as early as May, Deveras said.
“This issue will allow RCBC (to maintain) total CAR above 12 percent, despite our fast risk asset growth,” he said.
Basel 3 framework is a complex package of reforms designed to improve the ability of banks to absorb losses. It also extends the coverage of financial risks and requires stronger firewalls to protect banks especially during periods of stress.
The framework was implemented in the country at the start of the year.
According to RCBC, the banking unit of the Yuchengco group, the Basel 3-compliant tier 2 notes will have a minimum tenor of 10 years. The bank will have the option to call or redeem the notes on the fifth year.
“The tier 2 note issuance is part of the bank’s thrust to strengthen its capital adequacy ratio in accordance with Basel 3 capital guidelines of the BSP, and to support the bank’s continued growth,” RCBC said in its disclosure.
It was earlier projected that RCBC would grow its loan book by as much as 30 percent this year—much faster than the average 12-percent growth in the past five years—as infrastructure projects under the public-private partnership program could boost corporate lending portfolio. Part of RCBC’s strategic focus this 2014 is to increase the share of the business where margins are higher, particularly lending to consumers and small and medium enterprises.
Also, RCBC on Tuesday reported that it would infuse P3.5 million in additional equity investment in Luisita Industrial Park Corp. to maintain its 35-percent stake in the industrial complex developer.
