RCBC expands regional reach

MANILA, Philippines - The acquisition by Cathay Life Insurance Co. Ltd. of a 20-percent equity stake in the Rizal Commercial Banking Corp. (RCBC) gives the latter unprecedented regional reach, while opening the door to the Taiwanese financial giant into the Philippine market.

RCBC president and chief executive officer Lorenzo V. Tan said that was one of the reasons the commercial bank of the Yuchengco Group entered into a partnership with Cathay Life.

“Regional reach, that is what I am looking for,” Tan said.

In December last year, Cathay Life effectively acquired a 20-percent equity stake in RCBC for $400 million, which Tan described as fresh capital for the next three years.

In 2014, Cathay Life’s customer base reached over 7.5 million, and the number of business in force exceeded NTD15 million.

“They are the biggest financial company in Taiwan and they have $80 billion in assets under management (AUMs),” Tan said. “They can teach us a lot in manufacturing funds since the Philippines need something like $20 billion for the public-private partnership (PPP) program.”

Local bank and non-bank financial institutions cannot risk placing their short-term or limited funds in projects that are long-term in nature. But tapping the regional market, aside from domestic sources, opens the floodgates for huge amount of investible funds.

Cathay Life can now explore expansion opportunities in the country’s life and non-life insurance industry.

The Yuchengco Group has under its wings the leading non-life insurer in Malayan Insurance Co. and one of the leading bancassurance joint ventures in Sunlife Grepa Financial Inc.

Meanwhile, the bank chief executive said that RCBC can also derive value-add from the Cathay Financial relationship in the areas of consumer banking, wealth management, digital banking, cross-selling, corporate relationships across Cathay Financial’s network across Taiwan, greater China and the 10-nation ASEAN. Cathay Financial is the holding company, the biggest in Taiwan, of Cathay Life.

In a span of one month, Cathay Life acquired 40 percent of Indonesia’s Bank Mayapada Internasional Tbk PT, the whole of Conning Holdings Corp. of the US, and RCBC.

Cathay Life would have wanted to get a bigger share of the huge Indonesian bank if not for Jakarta’s regulation limiting foreign ownership to 40 percent.

The purchase of Bank Mayapada and RCBC gives Cathay Financial a platform to build its insurance and wealth management business in Southeast Asia, particularly Indonesia, the biggest economy in the sub-region.

Cathay Life acquired Conning Holdings Corp. of Hartford, Connecticut and all of its subsidiaries for a $240 million.

Conning is a global investment manager focused on the insurance industry with capabilities in risk and capital management and insurance research.

In Asia Pacific, Cathay Conning Asset Management, a joint venture between Conning and Cathay, will provide global investment and advisory services from its offices in Hong Kong.

It likewise establishing a complete financial services platform in asset management, banking and insurance in Asia, Europe and North America.

They currently have full banking license in Vietnam, Cambodia, and they also have a representative office in Myanmar. That likewise opens new opportunities for the Philippine bank.

Founded by the wealthy Tsai family, Cathay Financial is Taiwan’s largest financial holding company by assets.

Including Monday purchase, Cathay has now spent about $918 million on overseas acquisitions in the past six months.