IFC to invest $100M in RCBC

MANILA, Philippines - The International Finance Corp. (IFC), the private sector investment arm of the World Bank Group, has approved a $100-million investment in Yuchengco-owned Rizal Commercial Banking Corp. (RCBC).

In a statement, IFC said IFC Capitalization Fund has agreed to invest up to $100 million in the common shares of RCBC to shore up the bank’s capital base in anticipation of the  implementation of Basel III in 2014, and to increase lending to micro, small and medium enterprises and other underserved communities.

“We are happy to receive this significant capital commitment from IFC, which will allow RCBC to comply with the Basel III capital requirements set for Jan. 1, 2014,” said Lorenzo V. Tan, president and CEO of RCBC. “The capital will be deployed to grow RCBC’s small and medium enterprise loan book and consumer loan book by 28 percent and 30 percent, respectively, this year.”

RCBC earlier appointed Credit Suisse as financial advisor for the issuance of the shares to IFC.

IFC currently owns $50 million worth of shares or 6.7 percent in RCBC.

Due to growing competition in the banking industry, RCBC, one of the top five private commercial banks in the Philippines, has to beef up its branch network which currently stands at 400.

The lender also has plans to upgrade its online and mobile banking platforms to boost retail financial services, particularly for micro, small and medium enterprises, which provide 98 percent of the total number of jobs in the Philippines.

The bank is also under pressure to meet the Basel III rules which will require banks to roughly triple their capital levels compared to before the global financial crisis.

The IFC Capitalization Fund is a global equity and subordinated debt fund founded by IFC, and the Japan Bank for International Cooperation (JBIC). The fund, managed by IFC’s wholly owned subsidiary, IFC Asset Management Co. aims to support banks considered systemic for the financial system in emerging markets.

IFC Asset Management is currently managing some $4.7 billion worth of assets including the $3 billion IFC Capitalization Fund, the $1 billion IFC African, Latin American, and Caribbean Fund and the $182 million Africa Capitalization Fund.

“We are very pleased to partner with RCBC to help further strengthen its capital for growth and meet the new capital requirements under the forthcoming Basel III framework,” said Marcos Brujis, head of the IFC Capitalization Fund. “We look forward to helping an established local player develop in the fast-growing Philippine economy.”