By Imee Charlee C. Delavin, Reporter

Capital increase set for Robinsons Bank

Posted on April 28, 2015

GOKONGWEI-LED Robinsons Bank Corp. is beefing up its capital by almost half this year to finance its expansion plans and to comply with more stringent requirements set by the central bank.

Robinsons Bank President and Chief Executive Officer Elfren Antonio S. Sarte said the bank had increased its capital to P12 billion, from its previous capital of P6.1 billion.

“Our board already approved an increase in our capital, P6.1 billion to P12 billion. Our paid-up will be about P12 billion within the year from P6.1 billion,” Mr. Sarte said in a recent interview.

Asked why the lender is increasing its capital for this year, the Robinsons Bank chief said: “One is we’re expanding the bank, second is, being a commercial bank, we have to increase the capital by 2019 to P15 billion.”

“The group is already advancing the increase in capital by infusing the paid-up to P12 billion within the year, so P3 billion more to go, which we could already get via the retained earnings income. So we should be able to meet that P15 billion by 2019,” he added.

Sought for more details yesterday, Mr. Sarte said via text: “With the increase in capital for the year, we expect the bank to expand its operations and build up enough retained earnings to meet the required capital for commercial bank with over 100 branches, of P15 billion by 2019.”

The capital infusion will bring the bank’s core equity Tier 1 (CET1) capital, or high-quality and loss absorbent capital and capital adequacy ratio (CAR) -- a measure of a bank’s financial strength “well above the minimum CAR & CET1 capital requirement of BSP (Bangko Sentral ng Pilipinas),” Mr. Sarte added.

Mr. Sarte had earlier said that the Gokongwei-led bank’s net income is seen to fall this year as the lender targets to spend on developing its resources and expanding its network as banking systems in the region integrate.

In particular, Robinsons Bank eyes to focus on “capacity-building -- changing its structure, expanding its operations, and acquiring more talents.”

“We are increasing our operating expenses by hiring people and expanding branches which is CAPEX-intensive. We’re also reorganizing our cash management technology. Even our branch banking has been reorganized to ensure that we’re able to expand aggressively,” Mr. Sarte said, referring to capital expenditures.

The bank, which as of end-2014 has a network of 93 branches nationwide, also plans to put up up to 20 branches this year in both Metro Manila and provincial areas to grow its network and expand its market reach.

Mr. Sarte said putting up the bank’s planned 20 branches this year could set it back by about P120 million, with a single branch estimated to cost the company about P6 billion, plus hiring expenses.

The lender is also set to expand Legazpi Savings Bank, a Bicol-based thrift bank it acquired in late 2012.

Mr. Sarte said they plan to grow the savings bank network to “about 50 in about five to six years” from the current 11 branches.

Robinsons Bank is the banking arm of Gokongwei-led conglomerate JG Summit Holdings, Inc., the Philippines’ second largest conglomerate in terms of market value.

The lender said it posted a net income of P175.39 million in the first nine months of 2014, from P27.83 million, while its revenues fell to P1.92 billion for the same period from P2.14 billion in the preceding year due lower trading gains.

The BSP, at the start of 2014, ordered universal and commercial banks to set aside more buffers against financial stress -- a requirement under Basel III regime.

Basel III is a set of reforms introduced by the Basel Committee on Banking Supervision in the wake of the 2008 global financial crisis.

In particular, big banks were told to have a total CAR of at least 10%, a minimum Tier 1 ratio of 7.5% and a minimum CET1 ratio of 6% plus a capital conservation buffer of 2.5%, among others.