Basel II, expected to be implemented worldwide by 2008, will revise the international standards for measuring the adequacy of a bank’s capital. It was created to promote greater consistency in the way banks and banking regulators approach risk management across national borders.
In a special stockholders meeting Monday, RCBC’s board of directors said the additional capital will come from the bank’s iassuance of 1.1 billion common shares at P10 per share and 200 million preferred shares at P10 per share.
The commercial bank of the Yuchengco Group also declared a 15 percent stock dividend for the same purpose.
The additional capital offering also clears the way for the bank’s Tier 1 capital raising exercise seen the amount between $100 million to $150 million.
The bank’s capital build-up started in 2005 when it starting unloading non-performing assets (NPAs) through the special purpose vehicle (SPV) route.
This was complemented by the issuance of $100-million hybrid Tier 1 shares in the last quarter of 2006 and the issuance of P1-billion worth of perpetual non-cumulative preferred shares.
"We also sold P4.4 billion of our non-performing assets through the special purpose vehicle as well as private auctions and individual sale," RCBC president and chief operating officer Francisco S. Magsajo Jr., said.
The bank is aggressively increasing its capital to drive the growth of its portfolio and distribution reach consistent with long-term expansion plans. That likewise includes the disposal of P7-billion worth of non-performing loans (NPLs) this year.
Magsajo explained that their objective is to reach a capital base level well within the Basel II framework by the start of the second semester this year.
Meanwhile, Magsajo said there will be no management overlap with the entry of Lorenzo Tan in February.
"He (Tan) will be assuming his position of executive vice chairman and chief executive officer which is still being held by (Mr.) Rizalino Navarro," Magsajo clarified.
Navarro will be retiring from his post at RCBC by the end of the month, but will assume various chief executive posts of other major corporations under the Yuchengco Group of Companies.