RCBC prefers organic growth

MANILA, Philippines - The Rizal Commercial Banking Corp. (RCBC) will rely principally on its ability to expand organically, albeit leaving its options open for possible acquisitions.

That means expanding its branch and “extension offices”, maximizing electronic banking (e-Banking), and forging various strategic alliances.

RCBC president and chief executive officer Lorenzo V. Tan said that the bank’s expansion initiatives manifest its desire to better serve and reach out to its clients.

“It likewise indicates our aggressive push to reinforce our presence as a major player in the banking industry,” Tan added.

At the end of 2010, RCBC operated a combined branch network of 359, or 242 branches under the commercial banking operations and 117 under subsidiary RCBC Savings Bank (RSB). It services a combined customer base of 3.1 million.

Early this year, RCBC got the nod of the Bangko Sentral ng Pilipinas (BSP) to open two branches and that may increase substantially with the lifting of the moratorium on branch expansion in the restricted areas within Metro Manila.

To speed up the process, the commercial bank of the Yuchengco Group has likewise applied for permission to open 20 OBOs (other banking offices) and MBOs (microfinance banking offices). These are like extension offices of full branches, or the concept of hubs and spokes in the distribution process.

RCBC executive vice president and head of retail banking Ismael R. Sandig said that the idea is to grab opportunities for growth without stretching its pockets.

“We need not slowdown on branch expansion but rather slowdown in the cost of expansion,” Sandig said.

A full service branch will cost between P5 to P10 million depending on a lot of factors, while an MBO or OBO would be less than half that amount.

One full service branch can serve as a center for several OBOs and MBOs, thus increasing the bank’s reach without necessarily increasing its operations expenses.

The OBOs will be found in the Ninoy Aquino International Airport (NAIA) 3, Caticlan airport, the Diosdado Macapagal International Airport in Pampanga, as well as in streategic areas in Ilocos, Tagbilaran, Dumaguete, and Palawan.

RCBC has also expanded into the microfinance business through its President Jose P. Laurel Rural Bank Inc. based in Tanauan City and the Rizal Micro Bank (formerly Merchants Savings & Loan Association Inc.) in southern Mindanao.

Meanwhile, Sandig said that they would also want their branch personnel to increase the ratio of their cross-selling, or selling other products of the bank and affiliates, from a ratio of one to 1.3, to 1:6.

Recently, the bank official said that it is targeting to widen its My Wallet cash card membership to four million by 2012, more than double its present base of 1.5 million, as it negotiates more co-branding and partnership deals.

My Wallet is an all-in-one, pre-loaded cash card or electronic wallet (e-Wallet) that can take the place of credit cards and an automated teller machine (ATM) card.

And increasing the card base can be simplified by expanding its partnerships and distribution network.

Aside from all the branches, the cash card can be co-branded through alliances such as existing ones with Mercury Drug, 7-Eleven convenience stores, Enchanted Kingdom, and forwarding and parcel firm LBC. These establishments can also become reloading stations or centers where the cardholder can “load” cash into the e-wallet.

Still another manner in reaching its customer base, is through e-Banking. That means such distribution and transaction processes including phone banking, automated teller machines (ATMs), point-of-sale (POS), Internet and mobile banking.

RCBC operates 704 ATM units and plans to increase this by another 100 in 2012.

Nonetheless, any opportunity for an acquisition is always welcome. In fact, bank officials said that they were in talks with several thrift banks, although they refused to identify the banks or their location.