2 November 2022, Manila – The Board of Directors of Rizal Commercial Banking Corporation (“RCBC” or the “Bank”) approved today the increase in the shareholding of Sumitomo Mitsui Banking Corporation (“SMBC”), an existing shareholder of 4.999% of the total outstanding common stock of the Bank, to 20.0% through the combined sale and subscription of an aggregate of 382,057,224 common stock to SMBC.  The transaction involves the sale to SMBC of 213,437,248 common stock held as treasury shares in the Bank and the issuance to SMBC of 168,619,976 new common stock, at the price of 
PhP 71.00 per share (the “Transaction”).

SMBC’s strategic investment, bringing in PhP 27.126 billion (approximately USD 460.78 million) of new Core Equity Tier 1 (“CET1”) capital to the Bank, is part of the Bank’s capital raising plan to support long-term sustainable asset growth and investments in technology and cyber security and human resources. The proceeds from the investment will allow the Bank to expand the core business in key customer segments -- Corporate, SME and Consumer segments, and retail markets such as high net worth customers, mass affluent and mass market segments. SMBC’s strategic investment will also enhance the Bank’s digital plans and is expected to extend the reach of RCBC’s Sustainable Finance Framework.

Both parties are working expeditiously towards signing of definitive transaction documents. The completion of the Transaction will be subject to the terms of the transaction documents, customary closing conditions, and relevant regulatory approvals.

SMBC is one of the largest banks in Japan and is the commercial banking arm of Sumitomo Mitsui Financial Group (“SMFG”) with JPY 269.7 trillion in total assets and Consolidated Total Capital Ratio of 16.02%, as of 30 June 2022. The investment in RCBC is in line with SMFG’s strategy to expand in select key Asian markets, including the Philippines, Indonesia, Vietnam, and India.

Key Transaction Terms and Impact on Capital Ratios

The Transaction involves SMBC acquiring an aggregate of 382,057,224 common stock at PhP71.00 per common share for a total consideration of PhP27.126 billion (approximately USD 460.78 million). RCBC Parent Bank’s CET1 Ratio is expected to improve from 11.91%, as of 30 September 2022, to 15.93% on a pro-forma basis.

Expanded Areas of Collaboration

The Transaction is expected to result to a stronger partnership, with RCBC and SMBC stepping into significant opportunities for synergy and collaboration. RCBC will seek to derive significant value-add and expertise from the SMBC relationship in, but not limited to:

> Corporate Banking, Sustainable Finance and Project Finance - RCBC’s institutional relationships with the Top Corporations in the Philippines and SMBC’s extensive resources and broad global network will provide a strong partnership to take on opportunities in corporate banking, green and sustainable banking, and project finance. The collaboration will also cover Japanese Corporate Clients, where RCBC is a leading market player.

> Leasing - Opportunities in the leasing business will be maximized through subsidiary RCBC Leasing and Finance Corp. and Sumitomo Mitsui Finance and Leasing, part of SMBC Group.

> Consumer Lending (Credit Cards, Automobile, Housing Loans, and unsecured Personal Loans) - SMBC has a wide range of experience in consumer banking in Asia, not just in Japan but also in other developing countries including Indonesia and Vietnam. This will provide a significant boost to RCBC’s growing consumer business, with sharing of know-how and expertise, ideas and perspectives. In October 2021, SMFG, through its consumer finance arm, acquired a 49% equity stake in VP Bank SMBC Finance Company Limited (“FE Credit”), a leading consumer finance company in Vietnam, with top share of the market for cash loans and credit card services to retail customers.

> Branch Banking - For RCBC’s 452 branch network, SMBC will be a partner in transforming the branch experience with digital technology and data-based sales strategies. The branch of the future aims to increase high value customer engagement.

> Wealth Management and Trust - Working together to develop a wide range of investment opportunities for high net worth clients, RCBC and SMBC will be able to create more value for this specialized market and increase Assets under Management.

> Digital - RCBC’s digital efforts in creating innovative, inclusive, and interoperable digital solutions complement SMBC’s outlook on digital transformation in the region. This will benefit the Bank’s retail and corporate clients with a better customer experience, across different ecosystems. RCBC and SMBC share a common goal to accelerate growth and increase efficiency by leveraging on technology and digital advancements.

Advisers

Credit Suisse acted as sole financial advisor to RCBC, while Clifford Chance and Romulo Mabanta Buenaventura Sayoc & de los Angeles provided legal advice to RCBC.

About RCBC

RCBC is a leading financial services provider in the Philippines, offering a wide range of banking and financial products and services. RCBC is engaged in all aspects of traditional banking, investment banking, microfinance, retail financing (auto, mortgage and housing loans, and credit cards), remittance, leasing, foreign exchange, and stock brokering. RCBC is a member of the Yuchengco Group of Companies (YGC), one of the oldest and largest conglomerates in South East Asia. For more information, please visit https://www.rcbc.com.

About SMBC

SMBC is a leading financial institution in Japan as well as a globally-renowned provider of financial services. SMBC operates globally in retail banking, corporate banking, and investment banking, with a presence in approximately 40 countries and regions. SMBC as a group, together with its group companies, is also engaged in the leasing, securities, credit card, investment, mortgage securitization, venture capital and other credit-related businesses. For more information, please visit https://www.smbc.co.jp.

About SMFG

SMFG is the holding company for the SMBC Group. The SMBC Group is comprised of SMBC, SMBC Trust Bank Ltd., SMFL, SMBC Nikko Securities, Sumitomo Mitsui Card Company, Limited, SMBC Finance Service Co., Ltd., SMBC Consumer Finance Co., Ltd., The Japan Research Institute, Limited, Sumitomo Mitsui DS Asset Management Company, Limited and other subsidiaries and affiliates. For more information, please visit https://www.smfg.co.jp/