RCBC cleared to redeem $300 million capital securities

MANILA, Philippines — The Rizal Commercial Banking Corp. (RCBC) has received the go signal from the Bangko Sentral ng Pilipinas (BSP) to redeem in full its $300 million investment bonds, allowing the bank to optimize its capital structure. 

In a disclosure to the Philippine Stock Exchange, RCBC said the BSP has approved its move to redeem all of its 6.5 percent non-cumulative subordinated additional tier 1 (AT1) capital securities from investors. 

The Yuchengco-led bank said the redemption would be exercised under the terms and conditions of the capital securities beginning Aug. 27, the first optional call date.

AT1 capital securities, which are typically perpetual, serve as a key component of a bank’s regulatory capital. By exercising the call option, RCBC signals its financial strength and ability to manage its liabilities efficiently.

The redemption will be done through an issuer call, meaning RCBC will fully pay back the securities ahead of their scheduled maturity, as allowed under the instrument’s terms.

These capital securities form part of the bank’s AT1 capital under global Basel III standards, helping strengthen RCBC’s capital position and loss-absorbing capacity.

The bank’s AT1 capital securities were originally issued in August 2020 to help strengthen the bank’s financial position. The bonds, which helped boost the bank’s capital, were sold to investors at the height of the COVID-19 pandemic.

RCBC issued the dollar-denominated securities to support business expansion and maintain capital adequacy, and said the early redemption reflects its proactive capital management strategy.

The move comes as Philippine banks continue to strengthen their balance sheets amid regulatory reforms and higher capital buffers required by the BSP.