US fund manager wraps up purchase of RCBC stake

International fund manager Spinnaker Capital Group has completed the purchase of over 13 percent of the Yuchengco-led Rizal Commercial Banking Corp. (RCBC), making it the new minority partner in one of the country’s biggest lenders.

In a disclosure to the Philippine Stock Exchange (PSE); RCBC said Spinnaker Global Strategic FundLtd. acquired a 5.48-percent stake while Spinnaker Global Emerging Markets Fund Ltd. bought 8.06 percent of the bank.

RCBC said the Spinnaker Capital Group bought the shares last Dec. 15 to be used for investment purposes.

RCBC shares closed at P25.50 yesterday.

US-based Spinnaker Capital, a financial institution that specializes in investments in emerging markets globally, acquired the stake previously owned by Bank of Tokyo-Mitsubishi UFJ Ltd. (BTMU), a unit of Japan’s largest financial company.

"This entry of Spinnaker coincides well with our current drive to raise our capital funds, significantly reduce our non-performing assets and improve our profitability and balance sheet," RCBC executive vice chairman and chief executive officer Rizalino S. Navarro said in a previous interview.

RCBC has been trying to raise funds since last year in anticipation of the implementation of Basel 2. Earlier, the bank said it will first tap the onshore financial market for the issuance of its P1 billion worth of perpetual but non-cumulative preferred shares before floating another debt instrument that would qualify as hybrid Tier 1 capital.

"Our preferred shares issue will come first before the hybrid Tier 1 issue," RCBC president Francisco Magsajo said in a separate interview.

Magsajo explained the timetable requires that the issuance of the preferred shares, which qualifies as Tier 2 capital, will come first before the hybrid Tier 1 capital float in order to "get the maximum benefit" allowed by the regulators on the two floats.

As per central bank regulation, RCBC can issue some P500 million worth of hybrid Tier 1 debt instruments. The hybrid Tier 1 will have a perpetual tenor but callable in 10 years as has been the features of the capital notes issued by some banks.

According to Magsajo, both hybrid Tier 1 and Tier 2 capital issues of the bank will beef-up its capital adequacy ratio (CAR) to over 16 percent from the current 14 percent. The CAR measures the bank’s ability to pay its creditors, including depositors.