RCBC currency issue gets positive outlook from Fitch

Fitch Ratings Ltd. has revised its outlook on currency issues by the Rizal Commercial Banking Corp. (RCBC) from stable to positive.

In a statement, RCBC senior vice president and corporate information officer Elbert M. Zosa said "the consummation of RCBC’s plans to raise over P7 billion in fresh capital by mid-2007 through the issuance of 250 million new common stock shares via a public offering should lead to a ratings upgrade."

Meanwhile, the Bangko Sentral ng Pilipinas (BSP) approved RCBC’s recent plan to increase its capital stock from P9 billion to P13 billion divided into 1.1 billion common shares and 200 million preferred shares with a par value of P10 per share.

The BSP also gave the Yuchengco-led commercial bank the nod to go on with the sale of the 17.14- percent shareholdings of Bank of Tokyo Mitsubishi UFJ (BTMU) in RCBC to the Spinnaker Capital Group through its three investment funds.

Spinnaker Capital Group is a US-based financial institution that specializes in the emerging markets.

Earlier, the bank issued a $100-million non-cumulative step-up callable perpertual (hybrid) securities, which was classified as Tier 1 capital.

The capital hike is related to the implementation of Basel II framework which is risk-weighting and expected to force banks to increase their capital and provisioning.

The capital-raising activity may have increased RCBC’s capital adequacy ratio (CAR) to over 16 percent from 14 percent.

RCBC has still to rid itself of non-performing assets (NPAs) worth P12 billion. Of the total, non-performing loans (NPLs) are worth P7 billion, and the balance of P5 billion are real and other properties acquired (ROPA).

In 2006, the bank was able to dispose of some P4.4 billion in bad assets through the special purpose vehicle, direct sales, public auctions, and joint ventures.