RCBC retires P4B debt notes

By: Doris C. Dumlao - 11 years ago

THE RCBC Plaza. INQUIRER FILE PHOTO

MANILA, Philippines — Yuchengco-led Rizal Commercial Banking Corp. has retired the remaining P4 billion worth of tier 2 notes in its books ahead of the implementation of Basel 3 capital adequacy ratio framework, which no longer qualifies these as supplementary capital.

In a disclosure to the Philippine Stock Exchange on Thursday, RCBC said it recently fully paid these P4 billion unsecured subordinated notes due 2019, exercising the early redemption option on the notes.

Under the Basel 3 framework, which the Bangko Sentral ng Pilipinas has required commercial and universal banks to follow by January 2014, these subordinated notes will no longer qualify as capital.

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

The notes were issued in 2009 and would have matured on May 15, 2019 had they not been redeemed early by RCBC.

RCBC’s recently retired debt notes carried an interest of 7.75 percent a year payable quarterly.

If not redeemed, the interest rate would have increased in line with the “step-up” rate provision.

Through various equity deals, such as a new private placement by International Finance Corp. ($100 million), a private equity deal ($150 million) as well as asset sales, RCBC was able to raise the $430-million fresh capital it needs to prepare for Basel 3.

“Including (proceeds from sale of shares in) RCBC Realty and sale of Bankard, it’s complete,” said RCBC head of strategic initiatives John Deveras.

RCBC sold its 34.8-percent economic interest in the property firm that owns the RCBC Plaza on Ayala Avenue to a consortium of affiliate companies.

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.

The bank has also sold its 89 percent stake in the shell company of credit card issuer Bankard Inc. to a new investor represented by the trust unit of Philippine Business Bank, which is the same group that took over nickel miner Marcventures Holdings.