Cathay Life inks deal to buy 20% stake in RCBC

MANILA, Philippines - Listed Rizal Commercial Banking Corp. (RCBC) on Wednesday announced the signing of agreements paving the way for Taiwanese financial firm Cathay Life Insurance Co., Ltd. to acquire a 20-percent stake in the bank.

Cathay Life's P7.95-billion acquisition comprises 124.24 million new shares, 119.03 million shares bought from Hexagon Investments B.V. and 36.72 million shares sold by International Finance Corp.

In a statement, RCBC said the recent acquisition of Cathay Life is part of RCBC's efforts to raise capital in compliance with the more stringent capital adequacy rules under Basel III, an international regulatory framework that pushes for the regulation, supervision and risk management of the banking sector.

The bank said the transaction is also expected to enable RCBC to be comfortably above the minimum Core Equity Tier 1 requirements set by the Bangko Sentral ng Pilipinas.

"In addition, the proceeds from the investment will continue to support the continued growth of RCBC's loan book and increased expansion into the (small and medium enterprises) and consumer segments to improve margins and risk diversification/actuarialization. The transaction is also in line with Cathay's strategy to expand its business in ASEAN," RCBC noted.