Cathay Financial Said in Discussions to Buy Stake in Rizal

By Joyce Koh and Jonathan Browning

Cathay Financial Holding Co. (2882) is in talks to buy a minority stake in Philippine lender Rizal Commercial Banking Corp. (RCB), according to people with knowledge of the matter.
The Taiwan banking group may seek to purchase about 20 percent to 30 percent of Rizal Commercial, the people said, asking not to be identified as the negotiations are private. Rizal Commercial, with a market value of 70.8 billion pesos ($1.6 billion) at today’s close, said this month it’s in discussions for a private placement, without disclosing details.
Philippine President Benigno Aquino enacted a law on July 18 allowing the full entry of foreign banks, a move that could help accelerate capital flows into the country. Other Southeast Asian nations including Indonesia, Malaysia and Vietnam have restrictions on
foreign ownership of local lenders.
“We are seeking aggressively to invest in banks in Southeast Asia,” Cathay Financial Executive Vice President Alan Lee said by phone today. “There are no concrete details to be disclosed at this moment.” Rizal Commercial President Lorenzo Tan declined to comment on the discussions.
Rizal Commercial shares jumped 4.7 percent to 55.50 pesos in Manila, the biggest gain since May 19, in trading that was almost four times the daily average over the past six months. The lender, with $9.8 billion of assets, trades at 1.75 times its book value, data compiled by Bloomberg show.

Photographer: Maurice Tsai/Bloomberg News.

A customer enters the Da-An branch of the Cathay Financial Holding Co. in Taipei,... Read More

Japanese Interest

Japanese lenders have also expressed interest in Rizal Commercial, said one of the people, declining to name them. Japan Prime Minister Shinzo Abe said in June the move to open the banks to foreign ownership will help Japanese companies that operate in the Philippines or want to enter the country.
Bangko Sentral Pilipinas Governor Amando Tetangco said last week that expressions of interest to set up a Manila branch from foreign lenders increased after Aquino signed the law liberalizing the banking sector. The law lifts the cap on the number of foreign banks operating in the Philippines and allows them to take full control of local lenders.
CVC Capital Partners Ltd. bought about 15 percent of Rizal Commercial for 4.96 billion pesos, or 29 pesos a share, in May 2011. The Philippine lender said in July that its board approved a rights offer to raise as much as 4.5 billion pesos.
(An earlier version of this story corrected the full name of target bank.)