SMFL’s buys 30% of RCBC Leasing

Sumitomo Mitsui Finance and Leasing (SMFL) has agreed to acquire 30% of RCBC Leasing & Finance Corporation (RLFC), which is the part of RCBC that specialises in providing loans for equipment and vehicles. Instead of purchasing shares from an existing shareholder, SMFL is buying newly issued shares directly from RLFC, injecting fresh capital into the business to fund more leases and grow its portfolio rather than just transferring money between existing owners. Once the deal closes, SMFL will recognise its share of RLFC’s profits in its accounts, but it will not combine all of RLFC’s assets and debts into its own balance sheet, since it is holding a stake of less than 50% and does not have full ownership. The parties are currently finalising binding contracts, and the deal still remains subject to regulatory approval.

RLFC, established in 1957, is one of the Philippines most experienced finance and leasing companies. Over nearly seven decades, it has built expertise in finance leases, operating leases, term loans and receivables financing (providing cash against unpaid invoices). As of 31st December 2024, RLFC reported its total assets to be worth ₱8.239 billion, and maintains five offices across the Philippines in close collaboration with RCBC’s network. RCBC is one of the largest banks in the Philippines, with its total assets worth around ₱1.45 trillion.

Why SMFL is investing?

This deal deepens SMBC Group’ push in the Philippines, of which SMFL is a part of. The group’s plan is to build ‘multi-franchise’ platforms by focusing on a handful of high growth markets and plugging specialist units (such as leasing) into the bank’s network to serve customers better. The Philippines is a highly attractive market, where the economy has consistently expanded by around 6% annually over the past decade, and strengthened investment screening and reforms have brought in more than $14 billion in foreign direct investment over the past two years, making it highly attractive to businesses across retail, services and finance. RCBC provides the wide market access, through its banking licenses, branch networks, relationship managers and digital channels, ensuring strong customer reach. RLFC will contribute specialist knowledge in equipment financing, offering the products and expertise needed in this niche, and SMFL will provide global experience and robust systems, enabling the partnership to deliver financing solutions quicker.

Why RCBC and RLFC want the deal?

For RCBC and RLFC, a primary issuance means a direct capital injection into leasing the leasing unit. RCBC keeps 70% ownership and control, while RLFC gets fresh equity to write more leases. The short term impact on the group’s EPS (Earnings Per Share) is likely small given RLFC’s size, but the real benefit lies in building capacity and expertise that will compound in value over time. For SMFL/SMFG this move is a measured entry: by taking a minority stake, SMFL gains market access, client relationships and transaction data, without having to deal with the large costs, risks and operational challenges of a full takeover. If performance is strong, origination can scale quickly (the volume of leases and financing deals can quickly grow), else their exposure will be limited since only a minority investment is at risk. For clients, offering becomes more straightforward and faster to access. Leasing means financing is tied specifically to equipment, such as trucks, construction machinery or medical devices, where the asset itself also serves as collateral. Hence clients do not need to pay upfront, approval for financing can be sped up (since the assets linked to the financing have clear resale value), and general credit lines (for companies to pay suppliers and staff for instance) can be kept open.

How will it work in practice?

SMFL will set up vendor finance programmes with equipment manufacturers and dealers. This means customers can arrange financing directly where they purchase the asset, such as at a truck dealership or machinery supplier. This will shorten the time from purchase decision to delivery, making it easier for customers to buy and help dealers close more sales. RLFC can then integrate these vendor programmes into RCBC’s nationwide distribution network, giving them reach across the country. To manage risk and pricing, SMFL will use its expertise and apply straightforward underwriting guidelines, that’ll match the interest rate and loan term with how the asset is used, how it generates income, and how it loses value over time, ensuring pricing is fair and properly reflects the risk. Improved pricing and risk tools lets SMFL offer attractive rates to customers while keeping strict credit standards, so they stay competitive without taking on more risk. Finally, SMFL’s lifecycle and residual value management helps ensure leases stay profitable; throughout the lease period, they maintain the equipment through servicing and upgrades, keeping it in good condition. When the lease ends, they can resell or redeploy the asset through remarketing channels. This approach preserves the asset’s value, thus reducing the risk of unexpected losses from assets being worth less than anticipated. Put together, this’ll not just enable financing to be approved faster, but will enable bigger and more varied deals too.

Market Context

Following the interest rate and inflation shocks on 2023/2024 due to global supply chain disruptions, energy price volatility and aggressive monetary tightening pushed borrowing costs higher, many corporate borrowers began prioritising loans and financing structures where repayment schedules were stable and easy to forecast, and where the lender’s requirements (such as the debt limits or maintenance obligations) were clearly defined and transparent. Leasing is well suited to this, as contracts can include straightforward rules that can help manage risk on both sides. Exposures are also backed by collateral, which are tangible assets with clear resale value, proving security for lenders. The macroeconomic conditions in the Philippines are favourable for business, with the IMF forecasting GDP growth of around 5.5% in 2025; to support growth firms will need to renew their f leets, upgrade their equipment and expand their capacity, thus accelerating leasing demand.

Competitive Landscape

For many years ORIX METRO (a joint venture between the ORIX Corporation of Japan and Metrobank) has been the leading name in leasing in the Philippines, due to its strong vendor relationships and nationwide presence. A strengthened RLFC backed by SMFL will now create a credible second option for corporates and SMEs (small and medium sized enterprises), giving them another major leasing partner to work with, thus providing businesses with more choice and better pricing and service.

What to Watch

The transaction is still in its early stage, with closing dependent on signing the final agreements and securing the necessary regulatory approvals. Once complete, the success of the deal will primarily depend on how quickly vendor finance programmes can be put in place, whether approval times for leases shorten, and if average deal sizes grow without weakening credit standards. As more leases are written, it’s also important to maintain stable credit quality. This means closely tracking default rates and the value of assets at the end of leases. A stronger leasing platform will create a cross sell benefit, where customers are more likely to use RCBC’s other services (cash management, FX, trade finance).

Conclusion

Overall, this partnership will expand leasing capacity in the Philippines. SMFL enters the market, RLFC will get the resources and expertise to grow, and RCBC can offer more to its corporate and SME clients. If carried out successfully, it should lead to faster vendor deals, larger and better managed transactions, and a stronger more reliable leasing market in the Philippines.