The Philippine Stock Exchange-Philippine Dealing System unification may indeed be close to happening, possibly within this year, at an enterprise value of a little more than P2 billion for 100 percent of PDS.
Under the blueprint, PSE will first acquire a controlling stake in PDS and then merge their respective capital market infrastructure.
Contrary to some speculation, a banking source familiar with the discussions said the Department of Finance (DOF) is not interested in getting a board seat in a unified bourse. Instead, what the DOF is insisting on is that the deal be structured in a way that the PSE would buy out the Bankers Association of the Philippines (BAP) using shares instead of cash.
In other words, the DOF wants the banks to remain represented in the country’s future unified capital market infrastructure. Apparently, regulators are convinced that having bankers in the boardroom will contribute to good governance.
The thing, however, is that if and when BAP’s around 27 percent stake in PDS is converted into a direct stake in the unified entity, it may be too small to get even a lone board seat, our source said.
In general, most parties to this merger—especially the banks which are used to being a highly regulated industry—accept that the government had a stay in how to structure the PSE-PSE merger (which isn’t happening without prodding from government economic managers in the first place). Being the “town hall,” the source said the DOF (led by Finance Secretary Cesar Purisima) had the right to be part of and influence the merger discussions even of these two private self-regulatory organizations. “But the DOF does not want to be in the board,” the source said.
Meanwhile, another kink is that Singapore Exchange Ltd. (SGX) is apparently reluctant to accept a little over P2-billion pricing for PDS when the third-party valuation amounts to around P4 billion. For its part, SGX came in as an investor seeking to exit with a reasonable profit while the BAP and other local institutional investors had come in to help build a capital market infrastructure. But whether or not SGX accepts the PSE’s buyout offer is not a deal-breaker, our source said.
Assuming that all other parties (San Miguel Corp., Philamlife, Social Security System) except SGX will sell to PSE, which already has 20 percent in PDS, the PSE can still get 80 percent control of PDS—enough to effect a merger between the two entities. Doris C. Dumlao
New EastWest COO
Gotianun-led East West Bank will soon have a new chief operating officer (COO) and, like its chief executive officer Antonio “Tony” Moncupa Jr., the new executive will come from the treasury arena.
The incoming EastWest COO is Jose Emmanuel “Toto” Hilado, who stepped down as senior executive vice president and treasurer of Rizal Commercial Banking Corp. effective July 15. RCBC has yet to hire a replacement but the officer-in-charge of treasury following Hilado’s resignation is Lito Mercado.
Hilado isn’t expected to assume office at EastWest Bank until September this year. He is expected to take a holiday break before beginning a new chapter in his career.
Meanwhile, there’s speculation that the current CEO, Moncupa, is considering to join politics (the House of Representatives, perhaps?) sometime in the future. Note that in his younger days, Moncupa was an anti-Marcos activist who had gone to jail for his convictions.
His background as a banker and social reformer will certainly help if indeed running for public office has crossed his mind.
Moncupa, however, told Biz Buzz: “That politics thing keeps on cropping up, maybe because of my political background. No, it’s not true [I] am planning to run for Congress.” Doris C. Dumlao
BDO five-peat
BDO Unibank Inc. was named the best bank in the Philippines at the recently concluded 8th Annual Alpha Southeast Asia Best Financial Institution Awards, its fifth straight since winning the award in 2010.
The Hong Kong-based investment magazine Alpha Southeast Asia also cited BDO as the best trade finance bank and best foreign exchange bank for corporates and financial institutions.
Its subsidiaries BDO Capital and Investment Corp. was recognized as the country’s best investment bank, its eighth consecutive win; while BDO Private Bank was named best private wealth management bank for seven straight years. BDO was also acknowledged for having the third-best senior management investor relations support and the most organized investor relations team.
Alpha Southeast Asia is the first and only institutional investment magazine primarily written for institutional investors, asset and fund management companies in Hong Kong, Singapore, other parts of Asia, US, Europe and the Middle East.
The latest award, of course, validates to a large degree the expansion path that the country’s largest lender has taken, buying banks large and small (as small as Real Bank, for example).
Incidentally, we hear that many financial institutions—including acquisition-hungry BDO —are taking a cautious stance on United Coconut Planters Bank, which the government has put on the selling block.
“Too many issues,” is the common refrain, when we ask prospective buyers. Daxim L. Lucas
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