OREANDA-NEWS. Rizal Commercial Banking Corp.'s (RCBC; BB+/Stable) PHP1bn (USD21.3m) fine related to a money-laundering case earlier this year is unlikely on its own to materially weaken the bank's medium-term financial profile, despite being significant relative to its net income, Fitch Ratings says. We believe RCBC will continue to strengthen its operational policies and controls to avoid similar incidents in future.

The penalty is equivalent to roughly 20% of RCBC's 2015 net profit, and is the largest-ever imposed by the Bangko Sentral ng Pilipinas. We believe this demonstrates the regulator's firm view of the seriousness of the incident, in which USD81m siphoned from the Bangladeshi central bank's account with the Federal Reserve Bank of New York were coursed through accounts at RCBC among other conduits. However, the fine is a one-off, and we expect RCBC to remain profitable in 2016. The charge on its own does not significantly weaken the bank's medium-term profitability or its existing capital, funding and liquidity strengths.

Other potential repercussions that could have affected the bank's rating, in Fitch's view, such as a loss of key correspondent banking relationships, appear to have been averted since the details of the case first became public in 1Q16.

In imposing the fine, the Philippine regulator acknowledged RCBC's efforts to improve its anti-money laundering risk management systems and governance. We expect such efforts to continue, which should help to strengthen both RCBC and the banking sector.