Yuchengco-led Rizal Commercial Banking Corp. is unloading its stake in the office property company that owns RCBC Plaza along Ayala Avenue as part of preparations for stringent capital adequacy requirements under the Basel 3 framework.
In a disclosure to the Philippine Stock Exchange Tuesday, RCBC said its board has approved the sale of a 34.8-percent stake in RCBC Realty to the consortium of Pan Malayan Management and Investment Corp. and House of Investments for at least P4.31 billion to as much as P5.48 billion.
This means that the Yuchengco group will take the property exposure off RCBC’s books to allow the bank to focus on core banking businesses. By selling its entire interest in RCBC Realty, the bank not only generates proceeds but also reduces risk weights from property holdings especially as capital adequacy ratio requirements tighten under Basel 3.
RCBC head of strategic initiatives John Deveras confirmed that the transaction was part of the bank’s preparation to meet Basel 3 requirements, which the Bangko Sentral ng Pilipinas plans to implement in January 2014.
Deveras said RCBC was selling “all that it owns” in RCBC Realty. RCBC Plaza was the first office property developed in the Makati central business district to be granted an IT-zone status by the Philippine Economic Zone Authority, which means that qualified locators and tenants enjoy a package of tax incentives designed to attract foreign investments in the areas of computer- and knowledge-based operations such as IT solutions providers, shared services, software development and engineering design.
The office property consists of two towers—Yuchengco Tower and Tower 2, a three-level podium and seven levels of basement parking with a total area of 250,000 square meters. Besides office space, it houses the Yuchengco Museum, the 450-seat Carlos P. Romulo auditorium, a chapel that can seat 150 people, banking chambers in both towers, a VIP lounge, a gym and health spa, and an open-air courtyard.
Meanwhile, RCBC’s board also approved cash dividends amounting to P1 a share or a total of P1.14 billion to common and preferred shareholders.
To prepare for Basel 3, RCBC is raising $430 million in core or tier 1 capital, $200 million of which has been completed. The bank also earlier announced the issuance of as much as $130 million in Basel 3-eligible hybrid notes.