MANILA, Philippines — The Yuchengco family is consolidating its banking units by merging the operations of listed Rizal Commercial Banking Corp. (RCBC) and its wholly owned thrift bank arm RCBC Savings Bank to boost capital and cut costs.
RCBC corporate planning head and chief information officer Ma. Christina Alvarez said in a disclosure to the Philippine Stock Exchange (PSE) the merger would result in a more efficient capital deployment and operational cost efficiencies.
Alvarez said the proposed merger approved by the bank’s board of directors last Monday would also translate to a more efficient compliance with the Basel 3 liquidity ratios and improve funding economics over the medium-term.
She added the proposed consolidation would still be evaluated and approved by the Bangko Sentral ng Pilipinas (BSP), the Bureau of Internal Revenue (BIR) as well as the Securities and Exchange Commission (SEC).
The combined assets of RCBC and RCBC Savings Bank will reach P582 billion after the merger resulting in a one-notch increase in the ranking in terms of total assets in the industry.
RCBC is the 10th largest bank in terms of assets with P466.67 billion, while RCBC Savings Bank is ranked third with P123.17 billion.
According to Alvarez, the merger would result in the optimal coordination among the branches of both banks. RCBC has 332 branches and 1,138 ATMs, while RCBC Savings Bank has 154 branches and 459 ATMs.
At the start of the year, RCBC raised its authorized capital to P28 billion consisting of 2.6 billion common shares and 200 million preferred shares at P10 per share from P16 billion composed of 1.4 billion common shares and 200 million preferred shares to prepare for future capital raising activities.
The bank founded by the late taipan Alfonso Yuchengco needs to raise capital this year so as not to fall below the minimum capital thresholds.
Last July, RCBC raised P15 billion after completing the sale of shares to existing shareholders via a stock rights offering to further strengthen its capital ratios and support asset growth.
Major shareholders, particularly the Yuchengco Group of Companies with 52-percent interest and Cathay Life Insurance Co. Ltd. of Taiwan with 23 percent, participated in the fund raising activity.
It also raised $450 million from the issuance of senior unsecured, fixed rate notes as part of its $2 billion medium term note program. It raised $300 million in the international debt market in March and another $150 million in April.
Proceeds of the fund raising activities would be used for refinancing operations, general corporate purposes, and to participate in infrastructure deals.
The Yuchengco-led bank has also started the first tranche of its P20-billion long-term negotiable certificates of deposits (LTNCDs) offering after receiving the green light from the Bangko Sentral ng Pilipinas (BSP).
RCBC issued P2.5 billion worth of LTNCDs due 2023 in August last year and P2.1 billion worth of LTNCDs due 2020 in December 2014.