Taiwan’s Cathay Life acquires 20% of RCBC

MANILA, Philippines - The board of Rizal Commercial Banking Corp. approved yesterday the entry of Taiwanese financial giant Cathay Life Insurance Co.

In a disclosure to the Philippine Stock Exchange, RCBC said its board of directors selected Cathay Life Insurance Co. as the preferred bidder for a 20-percent block in the bank.

 RCBC said the transaction will require Cathay Life Insurance to subscribe to 124.34 million primary common shares at P64 apiece. This will allow RCBC to raise P7.957 billion in new core equity Tier 1 capital.

The deal also involves Cathay Life Insurance’s acquisition of 118.94 million RCBC shares held by Hexagon Investments B.V. and 36.72 million shares held by International Finance Corp. at P64 per share.

Moreover, Cathay Life Insurance will also need to enter into a shareholders agreement with Pan Malayan Management and Investment Corp. and RCBC.

The transaction will allow RCBC to pursue synergies with Cathay Life Insurance’s parent company, Cathay Holding Co. Ltd., one of the biggest financial holding companies in Taiwan.

“RCBC seeks to derive significant value-add from the Cathay Financial relationship in the following areas: capital, consumer banking, wealth management, digital banking, corporate relationships across Cathay Financial’s network across Taiwan, Greater China and ASEAN (Association of Southeast Asian Nations), (and) cross-selling,” the bank said.

RCBC added both parties are working together to negotiate and sign “definitive” agreements which includes a shareholders agreement, a subscription agreement and a sale and purchase agreement.

Due to the deal, RCBC said the board has placed on hold its planned P4.5-billion rights offer, which was approved by the Philippine Stock Exchange last Sept. 26.