Publicly listed Rizal Commercial Banking Corp. said it would sell a minority stake in the Yuchengco-controlled financial institution to Sumitomo Mitsui Banking Corp. and use the proceeds of the transaction to boost its lending activities.
In an online briefing, RCBC president and CEO Eugene Acevedo said the Philippines’ eighth largest lender by assets would get P4.48 billion from the Japan’s second largest bank in exchange for a 4.99 percent stake.
“The proceeds from the investment will allow the bank to finance the different requirements of key customers in the corporate, [small and medium enterprise] and consumer segments and expand the reach of its sustainable finance framework,” he said.
In the deal that was signed on Tuesday, Sumitomo will receive 101 million common treasury shares of RCBC, which are enough to give it one seat on the bank’s board of directors.
After the transaction, RCBC will continue to be controlled by the Yuchengco group with a 50-percent stake, followed by Taiwan’s Cathay Financial with 22 percent, Sumitomo with 4.99 percent, the World Bank’s International Finance Corp. with 3.4 percent, and the rest of the investing public holding the balance of about 19.3 percent.
Sumitomo has $2.2 trillion in total assets and a strong capital adequacy ratio of 18.6 percent of March 2021.
“The investment in RCBC is in line with Sumitomo’s strategy to expand its business in the Asian region in general and the Philippines in particular,” according to RCBC’s strategic initiatives head John Thomas Deveras.
He said Sumitomo would be acquiring the RCBC treasury shares at P44 apiece, which represents an 80-percent premium over the bank’s closing price on the Philippine Stock Exchange of P24.40 yesterday.
RCBC corporate planning head Ma. Christina Alvarez said the new funds from Sumitomo would augment RCBC’s Core Equity Tier 1 capital. The deal, she said, was part of the bank’s capital raising plan to support long-term asset growth and digital investments.
She added that the additional capital would boost the bank’s CET1 ratio from 11.01 percent to 11.75 percent as of June 2021.
The bank has P763 billion in assets under management at the end of 2020, behind seventh ranked China Banking Corp.’s P945 billion, but ahead of the Union Bank of the Philippines’ P687 billion.
In a separate statement, the RCBC said that “it sees significant opportunities for synergies and collaboration” with Sumitomo in consumer, digital and corporate banking.
“By leveraging the know-how and expertise Sumitomo has accumulated in serving consumer banking segments not just in Japan but also in other developing countries including Indonesia, RCBC aims to expand its consumer banking franchise,” it said.
It added that RCBC and Sumitomo share the same vision of accelerating digital transformation in order to deliver customer-centric banking products and services with superior customer experience.
“The partnership with Sumitomo will further enhance RCBC’s digital efforts in creating innovative, inclusive, and interoperable digital solutions, aligned with BSP’s ambition in promoting financial inclusion among the underserved and unbanked segments,” the bank said.
RCBC and Sumitomo intend to collaborate in the corporate banking segment by leveraging the former’s local expertise in the Philippines and the latter’s extensive institutional resources and broad global network.