RCBC raising P5B in additional capital

The Rizal Commercial Banking Corp. (RCBC) is raising up to P5 billion in additional capital to meet the requirements of regulators as well as finance its expansion plans.

Owned by the Yuchengco Group, RCBC plans to raise the amount through the issuance of preferred shares, the sale of non-performing assets (NPAs) with the help of the Special Purpose Vehicle Law (SPV Law), public auctions, and the entry of new partners.

RCBC vice chairman Cesar EA Virata said they are prepared to hold talks with interested investors for the 17-percent equity held by the United Financial of Japan (UFJ), a subsidiary of the UFJ Holdings which merged with the Mitsubishi Tokyo Financial Group.

The Mitsubishi Tokyo Financial Group is reportedly uninterested in keeping the RCBC stake.

Aside from this, the Yuchengco Group is prepared to trim its majority control of the bank to give way to new investors. "We are willing to be diluted to up to 51 percent but no lower."

RCBC plans to raise P1 billion from the issuance of preferred shares, between P2 to P3 billion from the sale of NPAs, and possibly P1 to P2 billion from new investments.

The P1 billion worth of preferred shares have been approved by regulators. The RCBC board issued non-voting, non-cumulative, convertible, non-redeemable, and participating preferred shares with a par value of P10 per share.

However, the possible sale of the 17-percent stake of the Japanese financial giant will have to undergo negotiations, and the sale of its P2- to P3-billion package of mostly ROPOA (real or otherwise properties owned or acquired) hinges on the passage of amendments to the SPV Law.

"We continue to explore avenues to new partners," Virata said.

Last year, the bank sold P6.5 billion worth of non-performing loans (NPLs).

It sold another P2.1 billion to the ADM Maculus Fund, a fund managed by the ADM Capital group early this year.

It was also able to raise $150 million in Tier 2 capital through issuance of senior notes.