Sumitomo Mitsui Banking Corp., one of the largest financial companies in Japan, will increase its shareholdings in Rizal Commercial Banking Corp. from 4.999 percent of the total outstanding common stock to 20 percent in a transaction valued at more than P27 billion.
RCBC said in a disclosure to the stock exchange Thursday its board in a meeting on Nov. 2 approved the sale of 382,057,224 common stock to the Japanese bank.
“The transaction involves the sale to SMBC of 213,437,248 common stock held as treasury shares in the bank and the issuance to SMBC of 168,619,976 new common stock at the price of P71.00 per share,” RCBC said.
SMBC’s strategic investment would bring in P27.126 billion or $460.78 million of new core equity tier 1 capital to RCBC.
RCBC said SMBC’s investment is part of its capital-raising plan to support long-term sustainable asset growth and investments in technology and cyber security and human resources.
“The proceeds from the investment will allow the bank to expand the core business in key customer segments –corporate, SME and consumer segments and retail markets such as high-net worth customers, mass affluent and mass market segments,” it said.
RCBC said both parties were working expeditiously towards the signing of definitive transaction documents. The completion of the transaction will be subject to the terms of the transaction documents, customary closing conditions and relevant regulatory approvals.
SMBC is one of the largest banks in Japan and is the commercial banking arm of Sumitomo Mitsui Financial Group with 269.7 trillion yen in total assets and consolidated total capital ratio of 16.02 percent as of June 30, 2022.
The investment in RCBC is in line with SMFG’s strategy to expand in select key Asian markets including the Philippines, Indonesia, Vietnam and India.
RCBC posted an unaudited consolidated net income of P10.1 billion in the first nine months, up 88 percent year-on-year due to the 29-percent improvement in gross income.
Net interest income climbed 13 percent to P24 billion, fueled by growth in loans and investment securities. Non-interest income went up by 92 percent to P10.6 billion on higher retail transactions, foreign exchange gains and miscellaneous income that includes gains from a property sale in September.
Total assets rose 23 percent year-on-year to P1.1 trillion as of end-September. The bank’s loan portfolio, which accounts for 51 percent of total assets, rose moderately with the consumer and SME segments leading the growth.
Total deposits increased by 28 percent year-on-year. “The continued thrust towards customer centricity and digital transformation allowed the bank to innovate, be more competitive, leading to sustainable growth,” RCBC president and chief executive Eugene Acevedo said.