A long time ago, Don Jaime Zobel de Ayala was said to have confided to some friends his frustration that the Ayala group’s life insurance business could not grow as fast as he wanted. Ayala Life (with assets of P12 billion) was eventually folded into Bank of the Philippine Islands (BPI), which pioneered “bancassurance”— a special arrangement that allows sale of insurance products in bank branches in the Philippines. It’s thus not surprising if the Ayalas take the big leap forward, given their strong financial position and strategic fit with Philippine American Life and General Insurance Co. (Philamlife), the Philippine crown jewel of American International Group.
Whether Philamlife is auctioned solo (with P104 billion assets) or lumped with its subsidiaries (which will raise the ante to P170 billion), it’s a deal that can alter the power structure in the Philippine financial sector if a local group (or a foreign group with onshore operations) gets it. Given the global risk aversion, there’s a good chance that a group already familiar with the local market can submit a faster and better offer to cash-strapped AIG.
If either BPI, Metropolitan Bank and Trust Co. or Banco de Oro Unibank gets Philamlife, it will become the undisputed number one bank.
And we won’t count out the Yuchengco group’s RCBC-Malayan-Grepalife just yet. Maybe RCBC — Rizal Commercial Banking Corp. — rather than its sisters Malayan Insurance and Great Pacific Life, will take the lead. After all, RCBC president Lorenzo Tan knows the insurance business, as he used to head the local unit of Sun Life of Canada.
But Sun Life itself is a strong contender, too, because its avowed goal is to become the country’s number one insurer by 2010.
Manulife, which has the highest return on assets among the country’s insurers, may also want to position itself as the dominant player.
There’s also San Miguel Corp., the beverage, food and packaging group that now aims to be a diversified conglomerate. Its president, Ramon Ang, our sources say, had approached investment bank Morgan Stanley to help in the acquisition of Philamlife even before AIG made the decision to sell. Doris C. Dumlao
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Fast times in Singapore
The head of a government financial institution (GFI) was spotted two weekends ago flying to Singapore to watch the inaugural Formula One Grand Prix in that city-state.
Our sources said the GFI chief flew there courtesy of some “sponsors” who “wined and dined” him during the festive weekend. They said he flew first class on Singapore Airlines and was billeted at the $1,000-a-night Fairmont Hotel. Depending on who you listen to, he was also said to have been joined on the trip by a “female companion.”
People concerned about public funds, however, should put their fears to rest. The tab was picked up entirely by business associates in the hope of currying favor with this very influential official. Daxim L. Lucas
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Where to get $700B
The protracted debates over the $700-billion “Mother of All Bailouts” aimed at cleaning up the toxic assets clogging the US banking system have kept everyone jittery for weeks — but not as jittery as a congressman from a province just north of Metro Manila, who must have either missed out or misread the extensive page-one coverage of the crisis by all of the country’s dailies.
At a budget hearing at the House of Representatives last week, at which a top central bank official was asked in plenary session to discuss the turmoil in Wall Street, this solon suddenly asked: “But where shall we get the $700 billion?” And to show proof why he was all that worried, he pointed out that the central bank’s foreign exchange reserves (at $37 billion) were too small to cover the amount.
Fortunately, the much-ballyhooed bailout package was finally passed by the US Congress and signed into law by President George W. Bush over the weekend — before our congressman could think of “inserting” it into the 2009 budget. Doris C. Dumlao
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Economics 101 in Malacañang
At a press briefing by government economic managers in Malacañang last week, Finance Secretary Margarito Teves explained to the media the difference between an economic slowdown and a recession, to underscore how crucial the $700-billion US bailout package was for the rest of the world.
“If it’s a slowdown, my neighbor loses his job. If it’s a recession, I lose my job,” he said.
What Teves apparently didn’t know was that there was a text message concocted by an investment biker (an investment banker who rides a bike) doing the rounds in business circles that contained the same Economics 101 joke.
But the investment biker’s SMS version has a punch line that nobody will dare recite in Malacañang: “Economic recovery: when the chief economist loses her job.” Doris C. Dumlao
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Buying Meralco on dips
ATR Kim Eng Securities has aroused the curiosity of stock market watchers who observed the influential stockbrokerage and investment house scooping up large numbers of Manila Electric Co. (Meralco) shares when Philippine share prices were dropping because of the US financial crisis.
In fact, ATR Kim Eng bought the most number of Meralco shares in September, with a net acquisition of more than 800,000 shares, while the whole market was tanking.
This buying spree is made even more curious by the the fact that Meralco is not exactly a darling stock at this point, given the accusations of mismanagement being hurled against it by some in government.
Nonetheless, ATR’s accumulation has helped Meralco’s stock price recover from a low of P47.50 last month to P58.50 as of last week — much like how the Government Service Insurance System helped the stock price recover when it accumulated Meralco shares in the previous quarter.
Word is that ATR is doing the buying on behalf of a government financial institution (take your pick as to which one) in preparation for a move to wrest control of the power distributor from the beleaguered Lopez family. Of course, it helps that the President’s brother, Diosdado “Buboy” Macapagal Jr., is ATR’s senior managing director. Daxim L. Lucas
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The search is (not) over
The government will continue to face the international investment community without an Investor Relations Office (IRO) head for now, after the appointment of shoo-in candidate Leo Herrera-Lim hit a snag.
Our sources said Herrera-Lim — who works as a consul general at the Department of Foreign Affairs — was “not allowed” by his parent agency to take the post, which is technically under the central bank, Bangko Sentral ng Pilipinas, or BSP.
This means BSP Governor Amando Tetangco Jr. will now have to resume his hunt for a new IRO chief, which is becoming increasingly urgent, given that the post has been vacant for several months after its former head, Rene Pizarro, resigned, and given also the prospect that the US financial turmoil may set foreign investors to look to our shores for less-risky, higher-yield investments.
The investor relations job is set to become more important in the coming months, as the government will have to borrow more from abroad amid a global financial and economic crisis.
Herrera-Lim’s aborted appointment could be a blessing in disguise for Tetangco, who can now choose a face more familiar to investors. But he will also have to fend off the inevitable politician-backed applicants. The question is: Who would want the job at a time that global appetite for emerging markets is evaporating? Daxim L. Lucas
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Power-salad at Le Soufflé
Diners at Le Soufflé in the Lopez group’s Rockwell business, commercial and residential enclave in Makati City are familiar with two salad offerings with powerful names.
For starters, one can have the “Don Manolo Lopez Salad” — a healthy combination of assorted lettuce, cucumber, celery, blanched broccoli, asparagus and capsicums in aged balsamic dressing. Not bad for P350.
But one can tell who reigns supreme in the Lopez business clan’s kitchen.
The “Connie Lopez Salad” — seared scallops, pan fried goose liver and grilled mushrooms in raspberry vinaigrette dressing — is a delectable dish for P750.
Jess, the restaurant’s owner and chef, guarantees that these two entries under the “Refreshing New Salads” are a hit. After all, some powerful names are at stake. Juliet L. Javellana
