LandBank’s planned buyout of PDS needs PCC approval

State-run LandBank of the Philippines should immediately notify the Philippine Competition Commission (PCC) once the lender’s proposed acquisition of the Philippine Dealing System Holdings Corp. (PDS) has formally begun.

PCC Commissioner Johannes Benjamin R. Bernabe said that as of now, LandBank is not yet required to report to the antitrust body about its intention to acquire a majority stake in PDS, the holding firm of the country’s fixed-income trading.

“What I understand they’re currently undertaking their due diligence. Under the law and under the regulations of PCC, they are allowed to notify PCC within 30 days from or after signing the definitive agreement,” Bernabe told reporters.

Under PCC rules, phase one reviews have to be finished within 30 days after the singing of the agreement. If a more comprehensive study is warranted, the antitrust regulators move to a phase two review that should not exceed 90 days.

“They are not precluded from notifying us even now if they’re inclined to do that but I guess it’s too early, premature because they are still in due diligence audit,” Bernabe said.

He also pointed out that government-owned and controlled-corporations, such as LandBank is not exempted from the PCC rules.

Earlier this week, LandBank President Alex V. Buenaventura said that it had started conducting due diligence for the proposed takeover of PDS.

Buenaventura also said that LandBank applied with the Securities and Exchange Commission (SEC) for exemptive relief from rules preventing an industry or business group from owning more than 20 percent of an exchange.

LandBank’s board had approved the acquisition of at least 66.67 percent of PDS.

However, the state-owned lender’s plan is in a collision course with the Philippine Stock Exchange (PSE), which is in the process of consolidating control over PDS through the acquisition of stakes from various institutions.

In December last year, the PCC approved PSE’s plan to merge with the PDS.

Earlier, Finance Secretary Carlos G. Dominguez III said that LandBank will be aggressive in ensuring that the government will have a controlling stake in PDS.

Dominguez, the ex-officio chairman of LandBank, admitted that he was disappointed with how the PSE ensures that the planned merger of the local bourse and the bond market is for the best interests of the public.

The finance official pointed out that the PSE has yet to lower broker ownership in the company to the 20 percent as required by the SEC.

“Around September of 2016, I told PSE to be compliant with the law with regard to the allocation of their share to groups of shareholders as a condition to SEC’s approval of their plan to acquire PDX,” Dominguez said.

“As of now, 16 months later, they are not compliant,” he added. “The development of the capital market is being slowed down by the PSE’s inability to be compliant with the law.”

With PSE’s failure to comply with the corporate regulator’s order, Dominguez said that LandBank is willing to take control of PDS, noting “the Duterte administration will no longer tolerate private institutions thwarting the goal of achieving a robust and inclusive financial system.”

Dominguez said that LandBank will offer an “aggressive bid” to all existing shareholders of PDS to sell their stake to the state-owed bank, the country’s fourth largest lender in terms of assets.

“We will make a bid, we will make an aggressive bid, I think,” Dominguez told reporters when asked if LandBank can convince the PSE, along with other PDS shareholders to sell their stake in the company.