Breaktime
License to till
By Conrado Banal III
Philippine Daily Inquirer
First Posted 01:57:00 08/26/2008
Filed Under: Banking, Mining and quarrying
Publicly listed Security Banking Corp. has just become the first bank to get a central bank license for issuing financial instruments called derivatives.
As everybody knows, except perhaps pawnshops and moneychangers, the central bank, Bangko Sentral ng Pilipinas (BSP), has tightened its rules on such financial instruments.
For the sake of the action stars in the Senate, derivatives are not living things, because they are banking products that help business reduce risks.
In effect, derivatives are contracts that can be traded, with their value following the changes in the prices of the assets in the contracts such as bonds, stocks, currencies, or anything under the sun.
I mean, even the weather can be part of the “variable” in a derivative.
What I am saying is that derivatives can be quite risky—particularly since most of them are highly leveraged.
That is the reason why the BSP watches the banks closely in doing business in derivatives. Doing derivatives, to a bank, is rather similar to gambling in that you can lose your pants and shirts, and everything underneath.
Anyway, its new BSP license, which was the first to be issued to a bank, now allows Security Bank to cultivate more “sophisticated” derivatives.
The other banks have until January next year to get their BSP licenses. Or else the BSP will bar them from issuing derivatives.
But what now for Security Bank?
Rafael Algarra Jr., head of the bank’s treasury group, said the bank was expanding the choices of “hedging” to its clients.
He said the bank could now offer more sophisticated “solutions” to fit the needs of clients in specific industries and business sectors.
Read that as “tailor-made” derivatives.
* * *
Over in Palawan, one thing bothers its government officials on the controversial Bangsamoro Juridical Entity memorandum of agreement (MOA) being peddled by this cute administration.
And that is, well, why on earth are the big business groups in Palawan keeping quiet, particularly those in the areas affected by the MOA.
As everybody knows, except perhaps the government panel in the peace negotiations with the Moro Islamic Liberation Front, the people of Palawan have been adamant in not wanting to have anything to do with any Muslim government in whatever form, shape and figure.
They have voiced out as much in four plebiscites already, forgodsakes!
Anyway, under the new MOA of this cute administration, two towns of the province are supposed to be covered by the Bangsamoro Juridical Entity (BJE), namely, Balabac (an island) and Bataraza.
Now, the most populous village in the municipality of Bataraza is the one called Rio Tuba.
That is the site of the highly profitable mining company of the Zamora brothers, called Rio Tuba Nickel Mining Corp., which has been raking billions upon billions of pesos in income due to the high price of nickel in the world market in the past several years.
The company also put up a $180-million processing plant under the company Coral Bay Nickel Corp.
It was a joint venture between the Zamora group and Japanese investors, designed to extract nickel from low-grade ores in the Rio Tuba mines that were previously considered as waste.
I mean, really, they have so much to worry about in the BJE-MOA controversy, don’t you think?
* * *
As everybody knows, one of the influential Zamora brothers is Representative Ronaldo Zamora (who was the executive secretary of the ousted president, Joseph Estrada, a.k.a. the man named Band … Wrist Band.)
The mining company, in other words, has some political clout.
Not only that, it is said that the two other brothers, namely Manny and Buddy, are allies of the Gloria Macapagal-Arroyo administration.
In fact, Manny was said to have hosted recently the visit of President Arroyo, together with First Gentleman Miguel Arroyo, to the island province.
With the First Couple were Sen. Juan Ponce Enrile and partner.
Word going around town is that the “visit” had something to do with the sale of an island (owned by an old-time politician) to one of the business tycoons who were also allied with the Arroyo administration.
The island happens to be part of Balabac town.
Oops, that is the same town in the controversial MOA. And the seller and buyer of the island is not the least bit concerned over the prospect of having the BJE rule in their island? Hmm.
* * *
Just about a month ago, violence almost erupted in the city of Narra in the same Palawan province, featuring the 30-man security contingent of Platinum Group Metals Corp. (PGMC) versus the 200 or so armed men sent by the Citinickel group.
The two companies are fighting over the nickel mining site in Narra, which PGMC used to operate under an agreement with the claim owner Olympic Mines. It seems that the Citinickel group sent those armed men to the mine site to try to take possession of the mining campsite, which was part of the claim—that is owned by the state.
But to get to the campsite, you have to go through the stretch of land that was owned by the PGMC.
The Citinickel “army” apparently wanted to take control of that piece of land, too.
Bloodshed was prevented only when the provincial contingent of the PNP sent reinforcement to the mine site, and Citinickel withdrew its men.
Previous columns:
Oldest procession - 08/12/2008
Prospero's new year - 8/07/2008
Wrong time ago - 07/29/2008
Filipino wine makers in Napa - 07/22/2008
Melting of the mind - 07/15/2008
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