Cathay Life Insurance Co. Ltd. (Cathay) now formally owns 20 percent of local lender Rizal Commercial Banking Corp. (RCBC), the transaction having been approved by the Bangko Sentral ng Pilipinas (BSP).
RCBC received the approval of the proposed sale and transfer of RCBC shares to Cathay on February 20.
The listing of the subscription shares with the Philippine Stock Exchange is expected within 10 days from receipt of the BSP approval.
Also, Cathay Life filed requests for approval of the same transaction before the Taiwanese regulatory authorities as the Investment Commission Ministry of Economic Affairs of the Republic of China, Taiwan and the Financial Supervisory Commission of the Republic of China, Taiwan.
RCBC said the closing of the transaction will occur upon the receipt of the BSP approval and the approval of the Taiwanese Regulatory Authorities for the transaction.
After the closing, the foreign ownership level at RCBC will rise to 36.29 percent.
The aggregate value of P17.920 billion worth of shares sold is broken down as follows:
The P7.951 billion to be received by RCBC from the purchase of unissued RCBC shares; the P7.618 billion to be received by Hexagon Investments BV (HIBV) from the purchase of HIBV owned shares; and the P2.35 billion to International Finance Corp. (IFC) for the purchase of IFC owned shares.
The proceeds of the investment will be used primarily to strengthen the capital ratios of the bank under the Basel 3 standards and to support its asset growth in 2015 and in subsequent years.
It said zero percent to 25 percent of the proceeds will be utilized to fund expansion in the bank’s distribution network, such as branches, automated teller machines and electronic channels within one year after receiving the proceeds, while 75 percent to 100 percent will be utilized to fund loans allowed under BSP regulations and general corporate purposes also within one year after receiving the proceeds.
The subscription to primary shares would boost RCBC’s common equity tier 1 (CETI) ratio from 11.5 percent to 13.9 percent, which will make RCBC, one of the well-capitalized universal banks in the Philippines.
RCBC and Cathay Financial will explore the areas of capital, consumer banking, wealth management, digital banking, corporate relationships and cross-selling across Cathay Financial’s network in Taiwan, Greater China and ASEAN.