The Yuchengco I knew
My friend, Alfonso T. Yuchengco, was buried before noon yesterday (April 20, 2017) at the family mausoleum at upscale Manila Memorial Park which he built. He died on April 15, at age 94.
Having been a business journalist for 47 years, I am one of the few given the privilege to interview AY a number of times over the past 25 years.
AY built the Yuchengco Group of Companies (YGC) conglomerate anchored on banking and insurance. He rebuilt his father Don Enrique Yu’s non-life insurance business, China Insurance, established in 1930, into what became Malayan Insurance. It went bankrupt because the Yuchengcos chose to honor war-related insurance losses.
AY’s father, Don Enrique Yu, was born Oct. 7, 1879. Enrique was given the name Cheng or Yu-Cheng, followed by “Co,” Chinese for “brother”, which was the custom in the Philippines. Hence, the family name “Yu Chengo Co”. Rice trading in Pangasinan was the original business. When Enrique died in 1953, Al Yuchengco, then 30, took over.
He restarted China non-life, calling it Malayan “because Filipinos belonged to the Malayan race”. It became No. 1. Then AY put up Grepalife in 1954 for life insurance. It became No. 5. In the 1960s, he bought Rizal Development Bank. He loved the Rizal name. It became RCBC—today the fifth largest local commercial bank. He put up the Manila Memorial park in 1964, acquired Mapua in 2000, and built the 48-story RCBC Plaza in 2001 as a joint venture with Singapore. In 2011, Sunlife of Canada bought 49 percent of Grepalife Financial, enabling RCBC to sell bancassurance products.
Helen Dee, 72, now takes over as the YGC matriarch, becoming the chair of most of the companies. She finished Commerce from Assumption College and MBA from La Salle.
In 2007, Helen hired Lorenzo Tan as CEO of RCBC. With AY, Helen Dee and Lorenzo Tan, along with former PM Cesar Virata, the vice chair, RCBC took off. As of end-2016, RCBC had assets of P521 billion, loans of P306 billion, deposits of P353 billion, equity of P62 billion. In 2016, profits fell 25 percent to P3.87 billion, from the record P5.13 billion in 2015, hurt probably by the $81 million dollar stealing scandal by Bangladesh.
In 10 years, with Tan as president, RCBC grew from 700,000 to seven million plus in customers. Its market value rose 10-fold. Cathay Financial’s entry valued RCBC at P100 billion with its $400 million investment for 20 percent of the bank. RCBC invested heavily in technology, talent and training as AY would want it. It sought strategic alliances with Sunlife Financial, Resona Bank and Okasan Securities. It repositioned PCI Bankard into RCBC Bankard, one of top five credit cards today.
RCBC redirected Grepalife into a global player in bancassurance (Top 5) with Sunlife Grepa. RCBC started the first microfinance business in Philippines by a unibank in Rizal Microbank. RCBC won more than 100 major international awards.
Unlike other conglomerates which are backstopped by property and power assets, RCBC grew by using the capital markets in what Tan called “a prudent, calculated strategy.”
For AY, building a business or a business empire does not happen overnight. It requires years of painstaking and patient and plodding hard work.
“Take your time. Prove what you can do first. Then go to the next step,” was his advice to would-be entrepreneurs.
At his prime, AY presided over a business conglomerate that at one time, included over 92 companies (of the YGC Group) under his main holding company, Pan Malayan Management and Investment Corp. There were five main companies—each a conglomerate in its own right: RCBC, House of Investments, Inc., MICO Equities, Inc., GPL Holdings, Inc., and AY Foundation.
YGC is one of the oldest, largest and most diversified conglomerates in Southeast Asia. It was a “womb-to-tomb” conglomerate. Insurance, banking and investments basically render basic services, from the time one is born to the time one is buried. By the dawn of the 21st century, it employed over 22,000 people.
The Yuchengcos have been in the Philippines for more 100 years. The family roots were established during the Philippine Revolution and the early years of the American administration (1896 to 1946).
By 2009, YGC had already resources of about P215 billion ($5 billion), with P22 billion in equity. Over the years thus, YGC became infinitely larger and stronger.
One secret of Yuchengco’s success was getting the right people to manage the enterprises and knowing well the companies he deals with. Thus, he hired famous people like Carlos Romulo, Cesar Virata, Mariano Cuenco, Antonio delas Alas, the late Roy Navarro, and banker Lorenzo Tan.
Among all Philippine taipans, AY was the least averse of having partnerships and joint ventures, especially with established names and multinationals abroad.
“You must deal with the right people,” he said. “You must study the past of the people you deal with, their track record, how they treat others, their sincerity, their honesty.”
Yuchengco put a premium on a good name and reputation. “A good reputation is more valuable than wealth,” he was wont to say.
AY was also an accomplished diplomat, a generous patron of the arts, and a philantropist. He was ambassador to China under President Corazon Aquino, to Japan under President Fidel V. Ramos, and to the United Nations in New York under President Gloria Arroyo.
As envoy to Beijing for two and a half years, AY got Deng Xiao Ping to pledge not to support Philippine communist guerillas.
As ambassador to Japan, AY boosted Japanese investments in the Philippines and helped sick OFWs who couldn’t seek medical health because they were illegal aliens. He was given two decorations by the Emperor of Japan.