RCBC plans to raise capital via entry of new investors

The Yuchengcos are looking at the possibility of diluting its share in Rizal Commercial Bank Corp. (RCBC) to 51 percent from the present 60 percent, through the entry of a strategic partner.

"One approach we are looking at where they (Yuchengcos) would be able to dilute their shares in the bank is through the entry of a strategic partner," RCBC vice chairman and chief executive officer Cesar Virata said.

With the Yuchengcos willing to own up to 51 percent of RCBC, Virata said, this would allow other parties to own 49 percent of the bank.

"It is possible for other parties to own up to 49 percent stake in the banks. There are already interested investments banks," he said.

According to Virata, they need to raise the bank’s capital and one of the options is to allow interested investors to come.

"If we want more capital, our shares have to be diluted. Or else it will not increase the capital of the bank," he said. At present, the capital adequacy ratio of RCBC is 15 percent, higher than the 10 percent minimum requirement by the Bangko Sentral ng Pilipinas (BSP).

In a recent disclosure to the Philippine Stock Exchange (PSE), RCBC said it is in talks with unnamed foreign financial institutions over a possible capital infusion.

The bank, based on its letter to the PSE, is seeking to improve its capital base "via a long-term strategic alliance with another institution that will not only infuse capital but also enhance business development and the technological expertise of the bank."

The bank earlier said it plans to raise its capital between 22 percent and 36.7 percent to P14.1 billion ($251 million) either by selling more shares to the public or through an infusion of fresh funds from either existing or new investors.

The Yuchengco family controls RCBC, with Japan’s UFJ Bank holding about 17 percent.

As of end-March 2005, RCBC ranked the 9th largest bank in the country with total assets of P167.8 billion.