Biz Buzz: Open sea­son

Philippine Daily Inquirer - - BUSINESS -

At any day now, the Bankers As­so­ci­a­tion of the Philip­pines (BAP), which con­trols about 24 per­cent of the Philip­pine Deal­ing Sys­tem Hold­ings (PDS Group), ex­pects to re­ceive a for­mal of­fer from the state-owned Land Bank of the Philip­pines to buy out its block of shares. An of­fer of in­tent had been pre­vi­ously sent but there were cer­tain mi­nor cor­rec­tions needed for the of­fer to be made of­fi­cial and el­e­vated to the BAP’s board. “It’s not a ques­tion of if, but when,” a source from BAP said.

Any buyer will of course re­quire a due-dili­gence au­dit on what­ever it’s buy­ing, which means that Land­bank and BAP will have to agree on a time­frame for which Land­bank could scru­ti­nize the books, the same ex­clu­siv­ity pe­riod that lapsed for the Philip­pine Stock Ex­change (af­ter sev­eral ex­ten­sion) on March 31. And Land­bank will have to talk to each of the other PDS share­hold­ers aside from BAP.

On the is­sue of cer­tain busi­ness be­ing taken out of PDS—which an­other PDS share­holder, SGX, isn’t happy about—par­tic­u­larly the for­eign ex­change trad­ing sys­tem that had mi­grated to Bloomberg three weeks ago, the BAP source ex­plained that the agree­ment with PDS ex­pired in Jan­uary 2017 and had been ex­tended sev­eral times as bankers awaited the PDS’ new pro­posal. But at that time, PDS was al­ready busy work­ing on in­te­gra­tion ini­tia­tives with the PSE and could not ful­fill the re­quire­ments, thus, BAP had to seek other ser­vice providers, even­tu­ally pick­ing Bloomberg, the source ex­plained.

“We’re happy how the tran­si­tion was man­aged,” the BAP source said, not­ing that the three-year ser­vice agree­ment with Bloomberg could no longer be re­voked de­spite ob­jec­tions from SGX. From their per­spec­tive, it’s an is­sue that SGX should have taken up with the man­age­ment of PDS, which was given the first crack be­fore BAP turned to other ser­vice providers.

In any case, the sta­tus quo is un­set­tling for the bank­ing in­dus­try. There’s con­cern that the PDS or­ga­ni­za­tion will lose more peo­ple as these tech­nocrats will of course seek sta­bil­ity. “If PSE is still in­ter­ested, let’s put a plan. If Land­bank re­ally has an of­fer, let’s come up with a plan. We can’t for­ever keep the un­cer­tainty,” the BAP source said.

For its part, the PSE keeps a flicker of hope that the PDS takeover may still hap­pen de­spite all odds—and de­spite hav­ing ruled out any bid­ding war against Land­Bank. The PSE said it re­mained “com­mit­ted to its vi­sion to unify the fixed-in­come ex­change and eq­ui­ties mar­kets and en­able all stake­hold­ers to reap the ac­cru­ing ben­e­fits of in­te­grated cap­i­tal mar­ket.” —DORIS DUM­LAO-ABADILLA

Carv­ing out GS trad­ing

If there’s one in­dus­try that has much to lose now that the fu­ture of the PDS is un­cer­tain, it’s the bank trea­sur­ers/gov­ern­ment se­cu­ri­ties (GS) deal­ers who have long loathed the mi­gra­tion of GS trad­ing to Philip­pine Deal­ing and Ex­change Corp. (PDEx).

The le­gal­ity of the GS trad­ing sys­tem un­der PDEx has been ques­tioned be­fore the Supreme Court but be­cause court res­o­lu­tion takes a long time, the PDS takeover by the PSE would have given banks a chance to go back to the over- the-counter (OTC) sys­tem out­side PDEx (where GS trad­ing is like­wise OTC but with some map­ping out sys­tem that al­lows price dis­cov­ery).

Last Fri­day, a group of bankers met with for­mer law­maker Luis Vil­la­fuerte

Sr.— part of the group that pe­ti­tioned against PDEx and fi­nan­cial reg­u­la­tors ( who re­quired the much-bal­ly­hooed GS trad­ing sys­tem)—to dis­cuss the im­pli­ca­tion of the court case if the gov­ern­ment were to end up own­ing PDS (through Land­bank). To re­call, PSE had agreed to carve out GS trad­ing from the PDS deal. What hap­pens if a new suitor, Land­bank, ends up mar­ry­ing PDS?

“I told them that our con­di­tions have noth­ing to do with Land­bank or PSE. What they did with PDEx was they were li­censed to en­gage in both ex­change and OTC oper­a­tion, which can­not be done un­der the law be­cause ex­change trad­ing is done through bro­kers while deal­ing in GS is dif­fer­ent. You can’t op­er­ate both the ex­change and OTC be­cause there are in­ter­nal con­flicts of in­ter­est there,” Vil­la­fuerte told Biz Buzz in a phone in­ter­view.

The GS trad­ing plat­form run by PDEx is not a real ex­change but an OTC mar­ket “un­der the guise of a map­ping-out” sys­tem, Vil­la­fuerte claimed.

Whether it’s PSE or Land­bank tak­ing over, or even as­sum­ing that no new party is com­ing in, Vil­la­fuerte said the case was al­ready in court and this would be with­drawn only if all par­ties would agree to scrap the “ob­jec­tion­able” fea­tures of GS trad­ing and carve this out of the PDEx plat­form.

When the par­ties thought that PSE would take over PDS, a com­pro­mise set­tle­ment had been in the works to carve out GS trad­ing from PDEx. But now that the PSE’s takeover bid had been scut­tled, ei­ther the court case will run its course or who­ever will con­trol PDS will con­tinue ef­forts to ad­dress the is­sues raised by Vil­la­fuerte’s group.

Apart from ques­tion­ing PDEx, Vil­la­fuerte also in­sisted that GS trad­ing be re­stored to the aus­pices of the Bu­reau of Trea­sury’s Registry of Script­less Se­cu­ri­ties (RoSS). Since the sec­ondary trad­ing of GS has be­come scrip­less—it’s just debit and credit trans­ac­tion at the Bu­reau of Trea­sury—Vil­la­fuerte ar­gued that a pri­vate cor­po­ra­tion (re­fer­ring to the cre­ation of Philip­pine De­posit and Trust Corp.) should not take cus­tody and col­lect fees when no phys­i­cal as­set had been is­sued.

“If there’s no buyer and it’s still un­der the orig­i­nal (share­hold­ers), this case will con­tinue un­til the mat­ter of the re­moval of GS OTC is made and un­til RoSS is re­stored to the DOF (Depart­ment of Fi­nance) from a pri­vate com­pany,” Vil­la­fuerte said.

For those who are won­der­ing why Vil­la­fuerte is so well­versed and pas­sion­ate about this is­sue, long be­fore he be­came a politi­cian, this guy was a top in­vest­ment banker and cap­i­tal mar­ket prac­ti­tioner. Bank­ing old-timers re­mem­ber him as a co­founder of the Money Mar­ket As­so­ci­a­tion of the Philip­pines.

The BAP, for its part, agrees with the course of ac­tion pro­posed by Vil­la­fuerte. —DORIS DUM­LAO-ABADILLA Crack­down En­ergy Sec­re­tary Al­fonso Cusi is un­happy about the fail­ure of some dis­tri­bu­tion util­i­ties to ful­fill their man­date of bring­ing elec­tric­ity to the far­thest cor­ners of the coun­try.

In­deed, in this day and age, hav­ing a steady sup­ply of elec­tric­ity is a key el­e­ment to help Filipinos raise their stan­dards of liv­ing. More than just pow­er­ing house­hold ap­pli­ances, elec­tric­ity helps peo­ple keep their elec­tronic de­vices run­ning.

And fully charged lap­tops and cell­phones mean farm­ers and fish­er­men in even the most re­mote barangay have ac­cess to in­for­ma­tion that could help im­prove their lives.

Biz Buzz hears, how­ever, that even the big­ger dis­tri­bu­tion util­i­ties serv­ing large prov­inces are be­hind on their elec­tri­fi­ca­tion tar­gets.

As such, we hear that the en­ergy chief is get­ting ready to crack the whip on these erring firms, many of which are large cor­po­ra­tions in their own right, or owned and con­trolled by in­flu­en­tial per­son­al­i­ties.

How? Cusi is said to be prepar­ing a new pol­icy that will or­der a per­for­mance au­dit of dis­tri­bu­tion util­i­ties na­tion­wide. Not even the big­gest, most well-con­nected ones, will be spared.

Also on the ta­ble in the event that some firms are found to be non­com­pli­ant—and we’re pretty sure that some big util­i­ties are sleep­ing on the job in this re­gard—the en­ergy chief is ready­ing a slew of sanc­tions that can be im­posed on the delin­quent firms, from the light­est slap on the wrist to the heav­i­est li­cense sus­pen­sions.

The goal, of course, is for the coun­try to fi­nally achieve that elu­sive 100-per­cent elec­tri­fi­ca­tion level that en­ergy of­fi­cials have been promis­ing all these years. Can Cusi do it? Dis­tri­bu­tion util­i­ties who don’t want to spend too much money on “elec­tri­fy­ing” mis­sion­ary ar­eas are prob­a­bly hop­ing he’s not too se­ri­ous about this plan. We’ll see. —DAXIM L. LU­CAS

End of an era

Mag­a­zine afi­ciona­dos will see fewer ti­tles in the mar­ket as Sum­mit Me­dia bade adieu to the print edi­tions of Cosmo, Pep, Topgear, FHM and Town and Coun­try—the last six brands pub­lished by Sum­mit Me­dia which had yet to go fully dig­i­tal. Un­til now, that is.

“As we em­bark on our new jour­ney to­ward a wholly dig­i­tal fu­ture, we look back at the val­ues that made us suc­cess­ful, and one thing that stands out is our re­spect for our au­di­ences,” Sum­mit Me­dia pres­i­dent Lisa

Gokong­wei-Cheng said. “Our brands, each with its strong voice and well-de­fined iden­tity, have res­onated with our au­di­ences be­cause they stand for some­thing, which is why for 23 years, Sum­mit pub­lished the most suc­cess­ful and well-loved mag­a­zines in the coun­try’s his­tory.”

As Sum­mit Me­dia heeds con­sumers’ pref­er­ence to con­sume con­tent in dig­i­tal form, the me­dia out­fit vowed to con­tinue de­liv­ery of “qual­ity, upto-the-minute con­tent and a dy­namic and en­gag­ing edi­to­rial ex­pe­ri­ence—this time, aided by data, which now per­vades and in­forms many of our edi­to­rial de­ci­sions. —DORIS DUM­LAO-ABADILLA

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