Japan’s Sumitomo Mitsui raises stake in RCBC via P27-B deal

Eugene Acevedo —Contributed photo

Japanese banking giant Sumitomo Mitsui Banking Group is boosting its stake in Yuchengco-led Rizal Commercial Banking Corp. (RCBC) to 20 percent through a P27-billion investment.

In a stock exchange filing on Thursday, RCBC said the deal would provide crucial capital amid its plans to aggressively expand its corporate, consumer and retail businesses.

It would also serve to bolster RCBC’s digital road map. For example, the partnership with Sumitomo meant upgrading its 452 branches with “digital technology and data-based sales strategies.”

The deal was deemed a strategic investment on the part of Sumitomo that would shore up capital and support RCBC’s “long-term sustainable asset growth and investments in technology and cybersecurity and human resources.” Sumitomo originally holds a 5-percent stake in RCBC.

RCBC said the latest transaction involved the sale of 382.1 million shares at P71 each, a 218-percent premium over its share price before the deal was announced.

The shares would be comprised of 213.44 million treasury shares and 168.62 million primary shares, diluting existing stockholders and making their shares less valuable.

RCBC said the deal would be subject to final closing conditions and regulatory approvals.

Meanwhile, the proceeds from the investment would allow the bank to expand its core business in key customer segments.

These include corporate, small and medium-sized enterprises, consumer segments and retail markets, such as high net worth customers, mass affluent and mass market segments, it added.

Strong earnings

For Sumitomo, the investment was in line with its expansion in select markets in Asia, which also includes Indonesia, Vietnam and India.

Sumitomo is one of the largest banks in Japan and is the commercial banking arm of Sumitomo Mitsui Financial Group.

The Yuchengco banking giant also announced strong earnings in the nine months to September period as a result of an asset sale and the performance of its lending segment.

Net income from January to September jumped 88 percent to P10.1 billion as net interest income rose 13 percent to P24 billion.

Non-interest income nearly doubled to P10.6 billion due “to higher retail transactions, foreign exchange gains and miscellaneous income, that includes gains from a property sale in September.”

Provisions for credit losses fell by 8 percent as the bank’s nonperforming loans ratio eased to 2.15 percent.

“The continued thrust toward customer-centricity and digital transformation allowed the bank to innovate, be more competitive, leading to sustainable growth,” RCBC president and CEO Eugene Acevedo said in a separate statement on Thursday.

Among its digital products is financial inclusion app Diskartech, which recorded a 63-percent jump in transaction volume to P4.2 billion.

RCBC ended September with total assets of P1.1 trillion, which was higher by 23 percent over the same period in 2021.