RCBC sees 15-20% growth in trust fund portfolio

The trust department of the Rizal Commercial Banking Corp. (RCBC), the banking arm of the Yuchengco group, expects a 15 to 20 percent growth in its trust fund portfolio this year, a top official said.

Lourdes Bernadette M. Ferrer, RCBC first vice president and trust officer, said "it would be safe to say that a 15 to 20 percent growth rate in 2004 is achievable," coming off a strong performance in 2003.

RCBC’s assets held under trust reached P48.8 billion in end-December 2003, an increase of 46.5 percent from P33.3 billion in end-2002 – the highest annual growth among the trust departments of the country’s commercial banks (KBs) and expanded commercial banks (EKBs).

As of end-March this year, RCBC’s trust operations already realized a 30-percent growth from P40.23 billion in March 2003 to P52.29 billion.

RCBC’s trust operations ranked fifth overall last year among the leading KBs and EKBs in terms of the assets under management (AUM). It provides trust and fiduciary services including common trust funds (CTFs) and other traditional products.

A CTF is a fund managed by the trust department composed of money from individual investors and banking clients, which in turn is reinvested in various investment instruments. Traditional trust and fiduciary services include employer benefit or retirement plans, escrow, personal trust funds, pre-need plans trust or reserve fund, and other investments management accounts (IMA).

According to Ferrer, 60 percent of the AUMs are traditional while the remaining 40 percent are with the CTF. The entire fund is expected to grow but the ratio between traditional and CTFs would likely remain unchanged.

The trust group head said that 2004 will serve as a transition phase in preparation for the inevitable mark-to-market environment tentatively set for 2005. "We have started the ground work, but we continue to talk with regulators as an industry," Ferrer said.

New products are also in the pipeline while its dollar-based products continue to enjoy strong sales. It has dollar investment products for a minimum of $10,000, and another for $20,000, which is already adjusted at mark-to-market rates.