RCBC affirms buy-in deal with Taiwan’s Cathay Life

YUCHENGCO-led Rizal Commercial Banking Corp. has secured board approval to bring in Taiwan’s largest life insurer Cathay Life Insurance Co. Ltd. as a strategic investor with a 20 percent voting block.

RCBC’s board affirmed Cathay’s purchase of a total of 280 million common shares in the bank, RCBC disclosed to the Philippine Stock Exchange on Wednesday.

The deal consists of 124.24 million in new common shares to be issued by RCBC and additional 155.76 million shares to be unloaded by other existing shareholders. Cathay will acquire 119.03 million shares from Hexagon Investments BV and 36.72 million shares from International Finance Corp.

It was earlier disclosed that the 20-percent block was priced at P64 per share or for a total of P17.92 billion.

The primary portion of the deal will raise P7.96 billion in fresh capital, boosting RCBC’s common equity tier 1 capital under Basel 3 framework from 10.9 percent to 13.5 percent.

Basel 3 introduces a complex package of reforms designed to improve the ability of banks to absorb losses. It also extends the coverage of financial risks and puts in place stronger firewalls against periods of stress.