RCBC unloads shares in realty company

THE RCBC Plaza. INQUIRER FILE PHOTO

MANILA, Philippines—Rizal Commercial Banking Corp. has obtained board approval to sell its 34.8-percent economic interest in the property firm that owns the RCBC Plaza on Ayala Avenue to a consortium of affiliate companies.

In a disclosure on Thursday, RCBC said the unloading of its interest in RCBC Realty was part of preparations for stringent capital adequacy requirements under the so-called Basel 3 framework.

Universal and commercial banks are required by the Bangko Sentral ng Pilipinas to adopt by January 1, 2014 the capital adequacy standards under Basel 3, which introduces a complex package of reforms designed to improve the ability of banks to absorb losses, extend the coverage of financial risks and have stronger firewalls against periods of stress.

A consortium comprising of Pan Malayan Management and Investment Corp., House of Investments and RCBC Land agreed to buy out all of RCBC’s interest in the property firm.

The transaction means that the Yuchengco group takes this 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 it also reduces risk weights from property holdings, especially as capital adequacy ratio requirements tighten under Basel 3.

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 solution providers, shared services, software development and engineering design, among others.

This 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.