The preferred shares conversion was programed along with the raising of $100-million non-cumulative step-up callable perpertual (hybrid) securities recognized as Tier 1 capital.
The two capital-raising activities increased the bank’s capital adequacy ratio (CAR) to over 16 percent from 14 percent, thus providing it with flexibility in "leveraging" its present capital base.
RCBC vice chairman Rizalino Navarro said the increase in authorized capital stock will come in the form of additional unissued shares that will answer for the conversion of the P1 billion preferred shares into common shares.
Navarro explained that a special stockholders meeting will be held to get approval for the capital hike as well as a stock dividend declaration. With the stockholders’ approval, RCBC can file a revision in its articles of incorporation before the Securities and Exchange Commission (SEC) and Bangko Sentral ng Pilipinas (BSP).
The shareholders meet will be held in January next year.
The capital hike is related to the implementation of Basel II, which risk-weighting and expected to force banks to increase its capital and loss provisioning.
It is also related to the much-delayed entry of new strategic investors after the 17.14-percent equity stake held by Tokyo-Mitsubishi UFJ Ltd. (BTMU) in the RCBC was placed on the auction block.
Last month, the US-based Spinnaker Capital Group acquired the 17.14 percent stake equivalent to 108,493,000 common shares. Spinnaker Capital may pay an estimated P2.3 billion for the BTMU stake based on the P21.25 per share trading price across the board.