RCBC to absorb thrift unit into commercial bank

THE Rizal Commercial Banking Corp. (RCBC) will absorb the operations of its thrift bank subsidiary to reduce operating costs and consolidate capital, providing the lender with a bigger retail base.

In a disclosure yesterday, the bank said it will merge the operations of RCBC Savings Bank (RSB) with the parent commercial bank.

The board of directors of RCBC Savings approved the proposal on Monday, but it remains subject to regulatory approval.

The merger plan also needs to be approved by bank shareholders, as well as by the Bangko Sentral ng Pilipinas (BSP), the Securities and Exchange Commission and the Bureau of Internal Revenue.

The Yuchengco-controlled bank told the Philippine Stock Exchange that the merger plan would allow for “more efficient capital deployment” and “operational cost efficiencies.”

In particular, RCBC said consolidating the two entities would mean “more efficient compliance with the Basel 3 liquidity ratios” as set by the BSP. This comes ahead of higher capital and liquidity requirements which will take effect January 2019, in line with global standards imposed on big banks.

The merger also paves the way for “optimal coordination between the branch banking networks of RCBC and RCBC Savings” as well as “medium-term improvement” in the firms’ funding economics.

The thrift bank is wholly owned by RCBC, with paid-up capital worth P3.19 billion.

Asked for comment, RCBC Savings Bank president and chief executive officer Rommel S. Latinazo said the merger is expected to boost the commercial bank’s retail network.

“With the merger, RSB’s consumer lending business will be absorbed by RCBC,” Mr. Latinazo said via text message.

Thrift banks like RSB mainly target individual borrowers and small businesses, which are deemed riskier but higher-yielding segments compared to corporate clients which commercial banks usually serve.

RCBC posted a P2.2-billion net profit in the first half, down 6.4% from a year earlier. The country’s 10th biggest bank currently runs 509 branches and 1,597 automated teller machines nationwide.

RCBC Savings is the thirdbiggest thrift lender with at least 154 branches and lending centers. It posted a P629.308 million net profit in the first half, according to RCBC’s income statement for the second quarter.

RCBC rose 2.8% to P25.70 in Tuesday trading.