IFC completes equity investment in RCBC

MANILA, Philippines - International Finance Corp. (IFC), the private sector financial arm of the World Bank group, completed its 5.6 percent equity investment in Yuchengco-led Rizal Commercial Banking Corp. (RCBC).

In a disclosure to the Philippine Stock Exchange (PSE), RCBC said IFC Capitalization (Equity) Fund L.P. has consummated its subscription to 71.15 million common shares of RCBC at P58 per share worth P4.12 billion.

RCBC said this equity acquisition scheme is in accordance with the terms and condition entered into by the two parties in Feb. 15 this year.

IFC’s investment in RCBC now at 12.3 percent will help shore up the bank’s capital base in anticipation of the 2014 implementation of Basel III.

The entry of IFC into RCBC will increase the bank’s lending to micro, small and medium enterprises and other underserved communities.

“We are happy to receive this significant capital commitment from IFC, which will allow RCBC to comply with the Basel III capital requirements set for Jan. 1, 2014,” RCBC president and CEO Lorenzo V. Tan said.  “The capital will be deployed to grow RCBC’s small and medium enterprise loan book and consumer loan book by 28 percent and 30 percent, respectively, this year,” he added.

RCBC earlier appointed Credit Suisse as financial advisor for the issuance of the shares to IFC.

Before the capital infusion, IFC owns $50 million worth of shares or 6.7 percent in RCBC.

Due to growing competition in the banking industry, RCBC, one of the top five private commercial banks in the Philippines, has to beef up its branch network which currently stands at 400.

The lender also has plans to upgrade its online and mobile banking platforms to boost retail financial services, particularly for micro, small and medium enterprises, which provide 98 percent of the total number of jobs in the Philippines.

The bank is also under pressure to meet the Basel III rules which will require banks to roughly triple their capital levels compared to before the global financial crisis.

The IFC Capitalization Fund is a global equity and subordinated debt fund founded by IFC, a member of the World Bank Group, and the Japan Bank for International Cooperation (JBIC). The fund, managed by IFC’s wholly owned subsidiary, IFC Asset Management Co., aims to support banks considered systemic for the financial system in emerging markets.