RCBC will not return Bankard to Equitable PCI

The Yuchengco-owned Rizal Commercial Banking Corp. (RCBC) said that it would not be able to return Bankard Inc. to Equitable PCI Bank but bank officials said the group has a pending claim of overpayment and they are suing to recover part of the acquisition cost.

This developed as RCBC disclosed it was on the look-out for another commercial bank that might become available for sale after the bank successfully raised $150 million from its recent international bond offer.

RCBC chairman and Bankard president Cesar EA Virata told reporters that the international tribunal was still in the process of gathering documents and evidence before it actually sits to hear the case.

Questions about the quality of Bankard’s P4.9-billion credit portfolio had led RCBC Capital to seek international arbitration to void their purchase agreement with Equitable-PCI Bank in 1999, claming they were misled about the company’s actual financial state.

According to Virata, however, RCBC had filed a claim for overpayment against Equitable PCI Bank but he declined to name the amount that the Yuchengco group was claiming in the arbitration case.

Virata hinted that RCBC was no longer in pursuit of its original intention for the international arbitration court to void the sale agreement with Equitable Bank, especially since Bankard has had moderate success in improving its operations.

"It will be difficult to return the company to Equitable Bank considering the time that has lapsed," he said. "But our claims for overpayment will be pursued."

"We don’t know how long it will take to resolve this case but all requirements are expected to be submitted before the Holy Week," Virata added. "Then the tribunal will sit and hear the case."

With the issue unsettled, Virata said Bankard management has been taking steps to improve the quality of its portfolio by improving its screening process for new card applications and monitoring systems, launching new card products, and branching out into new businesses.

Virata said that since the company has made good progress in improving its asset quality, in spite of the problems with the asset portfolio it inherited, Bankard wanted to take advantage of its tie-ups with major credit card companies and provide consultancy services.

Bankard had also moved into new fee-based businesses that would take it into the arena of web-based transactions and prepaid or debit cards, where they can collect on fees, rather than interest.

On the other hand, Virata said RCBC was in the market for the acquisition of another commercial bank should one become available for sale. He said the bank was on the look-out to acquire another bank as it sets new plans for future capital-raising activities sometime this year.

Virata said RCBC was able to raise $150 million from its bond offer at a seven percent yield rate.

The senior unsecured notes due 2010 was assigned a "B" rating by Standard & Poor’s and the proceeds of the debt issue are intended to refinance part of the bank’s existing obligations.

According to Virata, RCBC was now set on its course to expand its operations while keeping an eye on opportunities that might open in the commercial banking sector.

"If anyone wants to sell, we are ready to consider," Virata said.