August 27, 2014

RCB to issue P3b in Tier 2

In a disclosure to the Exchange yesterday, Rizal Commercial Banking Corp. (RCB) said that it reopened its Tier 2 offering to the public. RCB has received BSP approval to issue up to P10b in Tier 2 notes, and it has so far issued P7b on 27 Jun 2014 with an interest rate of 5.375%. The second offering will be up to P3b, unless otherwise adjusted by RCB and is expected to run from 26 Aug to 1 Sep 2014.

The bank is issuing Tier 2 notes to strengthen its capital base and support asset growth in light of the stricter capital requirements of Basel 3. As of end-1H14, RCB’s Common Equity Tier 1 (CET1) Ratio ended at 10.9% while its Capital Adequacy Ratio (CAR) ended at 13.8%.

Our take: The bank’s second offering is expected to further beef up RCB’s capital base. We note that before the issuance of Tier 2 Notes in 2Q14, RCB had one of the lowest capitalization ratios in the industry. The completion of the two tranches of Tier 2 offerings will allow RCB to better comply with the Basel 3 capitalization ratios and help it hurdle the impending real estate stress tests (REST) that the BSP is conducting for banks. – WealthSec