Sumitomo Mitsui Banking Corp., one of the largest banks in Japan, is acquiring a 4.99-percent stake in Rizal Commercial Banking Corp. for P4.48 billion.
RCBC said in a disclosure to the stock exchange Tuesday it signed definitive agreements with SMBC to acquire 101,850,000 common shares of RCBC held in treasury, representing a 4.99-percent stake in the local bank on a pro-forma, post-transaction basis.
“SMBC’s strategic investment which raises P4.48 billion [around $93.9 million] of new core equity Tier 1 capital for the bank is part of the bank’s capital-raising plan to support long-term asset growth and digital investments,” RCBC said.
The proceeds from the investment will allow RCBC to finance the different requirements of key customers in the corporate, SME and consumer segments and expand the reach of its sustainable finance framework, it said.
SMBC is one of the largest banks in Japan and is the commercial banking arm of Sumitomo Mitsui Financial, with $2.215 trillion in total assets and strong capital adequacy ratio of 18.61 percent as of March 2021 on a group basis.
The investment in RCBC is in line with SMFG’s strategy to expand its business in the Asian region in general and the Philippines in particular. The transaction will be subject to the terms of the definitive transaction documents.
The key terms of the transaction involve SMBC acquiring 101,850,000 common shares held in treasury at P44.00 per share for a total of P4.48 billion. RCBC parent bank’s CET1 ratio will improve from 11.01 percent to 11.75 percent as of June 30, 2021 on a pro-forma basis.
RCBC president and chief executive Eugene Acevedo said in an online briefing the tie-up was “strategic” amid the continuing pandemic and the risks it posed to the economy.
John Thomas Deveras, senior executive vice president and head of RCBC Strategic Initiatives and Asset Management Group, said RCBC was not inclined to offer more than the 5-percent stake to SMBC.
“[There’s] no option and timeline for that.. That is only 5-percent stake…,” Deveras said.
Acevedo also said RCBC would not bring in additional investors after the SMBC partnership. “We are happy with our partners right now,” Acevedo said.
RCBC and SMBC see significant opportunities for synergies and collaboration between both parties. RCBC will seek to derive significant value-add and expertise from the SMBC relationship in, but not limited to consumer banking, digital banking and corporate banking.
RCBC and SMBC share the same vision of accelerating digital transformation to deliver customer-centric banking products and services with superior customer experience.
The partnership with SMBC will further enhance RCBC’s digital efforts in creating innovative, inclusive and interoperable digital solutions, aligned with Bangko Sentral ng Pilipinas’s ambition in promoting financial inclusion among the underserved and unbanked segments.
Post-transaction, RCBC and SMBC intend to collaborate in the corporate banking segment by leveraging RCBC’s local expertise in the Philippines and SMBC’s extensive institutional resources and broad global network.
Credit Suisse acted as sole financial advisor to RCBC, while Clifford Chance and Romulo Mabanta Buenaventura Sayoc & de los Angeles provided legal advice to RCBC.