RCBC clears last obstacle in merger with thrift bank

The Securities and Exchange Commission has approved the merger of RCBC Savings Bank (RSB) and its parent bank Rizal Commercial Banking Corp.—the last piece of regulatory clearance needed to consummate the union.

Based on the merger plan, RCBC said it was “prudent and in the best interests of each bank and its respective shareholders that RCBC and RSB engage in a business combination in order to advance their long-term strategic business interest.”

RCBC’s new president and chief executive Eugene Acevedo aimed to double RCBC’s profitability, boost return on equity to 10 percent from 6 percent and enhance productivity while controlling cost in the next three to five years.

Under his leadership, Acevedo aims to initially reclaim, and then exceed, RCBC’s standing in the Philippine banking system before a scandal allegedly perpetrated by a rogue branch rocked the bank in 2016. Some $81 million in dirty money stolen by cyber-hackers from Bangladesh Bank slipped through RCBC’s Jupiter Street branch and laundered in local casinos. Because of this episode, RCBC’s ranking among the country’s biggest banks slipped from fifth to eighth place.

The banking group, which employs 6,000 people and operates 507 branches, spends 67 centavos for every peso earned. This is already an improvement from 73 centavos previously, but the next task is to bring this down to 54 centavos.

The merger is part of RCBC’s plan to rationalize its network to achieve optimal coverage, spread out footprint and end self-cannibalization in some areas.

In a disclosure to the Philippine Stock Exchange on Tuesday, RCBC said the merger would facilitate a more efficient capital deployment and compliance with the Basel 3 liquidity ratios, optimal coordination between the branch banking networks of RCBC and RSB, medium-term improvement in the funding economics, thus result in operational cost efficiencies.

The merger was executed by the Yuchengco-led banking group through a share swap.

RSB transferred its net assets to RCBC in exchange for around 315.3 million common shares of RCBC. —DORIS DUMLAO-ABADILLA