Publicly listed Rizal Commercial Banking Corp. (RCBC) said Friday it would acquire a rural bank in Batangas and use it primarily for its entry into the microfinance business.
In a special meeting on Wednesday, RCBC's board approved a P375 million shareholder facility for the acquisition of the JP Laurel Rural Bank, which is owned by a prominent family in Batangas. RCBC said the facility would be infused over a period of three years, from 2009 until 2011.
It added the plan would take effect upon the central bank's approval.
"Looking at business models in other countries including Indonesia and Mexico, we see that microfinance holds a lot of promise both as a profitable financial venture and as a means to assist in the development of small businesses. These are some of the reasons why we have decided to finally take this first crucial step in RCBC’s own foray into the microfinance business," RCBC president and chief executive Lorenzo Tan said in a statement.
RCBC said JP Laurel's geographic coverage is an important market for the overall business thrust of RCBC.
"RCBC plans to convert JP Laurel Bank, with its 10-branch network spread over Batangas, Laguna and Mindoro Occidental, into the Luzon base for its microfinance business operations. Once RCBC’s microfinance business is up and running, our strategy will be to stick to the banking basics of ensuring high efficiency and credit quality levels," said Tan.
RCBC is currently the country’s fourth-largest private universal bank in terms of assets and capital. It is a strong player in the remittance business with a wide presence overseas through remittance subsidiaries and tie-ups in North America, Europe and Hong Kong. RCBC is a member of the Yuchengco Group of Companies.