Biz Buzz: SSDB (Same style, different bank)

Many depositors of LBC Bank were caught by surprise when the thrift bank did not open for business last Monday (after regulators declared it insolvent just ahead of the weekend). After all, how could one of the most established names in the door-to-door courier and dollar remittance businesses go under practically overnight, right?

To the people at the Bangko Sentral ng Pilipinas, however, the bank’s closure was a process that was at least two years in the making.

According to our sources, the bank had been, for a number of years now, extending financial help in the form of huge advances to its affiliates. In particular, LBC Express and LBC Mundial were on the receiving end of these advances (known in banking jargon as loans to directors, officers, shareholders and related interests, or “Dosri”) that have trouble being repaid, from what we understand.

Worse: Its owners and managers failed to adequately address these problems, which the BSP had cited several times in their annual examinations. Ultimately, these advances were what killed the bank, we hear. (Yes, it’s a familiar story. It’s almost a repeat of the Urban Bank case in 2000 where it supposedly gave advances to its troubled investment banking unit, Urbancorp Investments.)

The good news is that more than 99 percent of the bank’s depositors are covered by the PDIC’s insurance. The bad news is that the taxpayers, through PDIC, will foot the bill.—Daxim L. Lucas

White knights lurking

Philippine Airlines’ controversial spinoff program is widely expected to be a prerequisite if the beleaguered airline were to attract a new investor. Could the potential white knight be the group of businessman Manuel V. Pangilinan? Or that of Ramon S. Ang of the San Miguel conglomerate? In the past, we’ve noted that these “frenemies” attempted to team up to propose a prospective PAL acquisition. But if tycoon Lucio Tan would put PAL on the block right now, industry sources said MVP and RSA would likely bid separately.

So is MVP interested? At the sidelines of Philex Petroleum’s listing on Monday, MVP only said the airline industry was a “difficult business.” He also asked in jest: “So which is more speculative—Philex Petroleum or PAL?” But historically, it was usually in such difficult enterprises—and assets in distress—where MVP would always find a golden opportunity in. So we won’t rule MVP out.

Meanwhile, other industry sources said someone close to Asia’s budget airline guru—Tony Fernandes of Air Asia himself—had also sent feelers to PAL in the past, but because the Malaysian tycoon’s local partner didn’t have a good history with the Kapitan, nothing progressed on this. So what’s in store for the country’s flag carrier? We’ll wait and see.—Doris C. Dumlao

Changing tunes

Slowly but surely, the guys behind the Development Bank of the Philippines’ crusade against its former officials and businessman Roberto Ongpin have begun to shift their line of attack.

In the beginning, they started the attack by saying that the loans were behest, for supposedly having been approved in haste and in violation of the bank’s main thrust of giving out “developmental loans.”

According to our sources, however, the new guys at DBP have now realized that this line of attacks won’t stand in court since the bank is, in fact, allowed by its charter to engage in commercial lending (on top of its primary mandate). In addition, bank boards are also allowed to authorize the speedy approval of transactions given the right bases.

So what now? Apparently, the bank’s new board has shifted its effort into pinning down former DBP president Reynaldo David and Ongpin on the charge of “insider trading.”

(Incidentally, we’re told that the bank’s “special operations” are being conducted out of an office in Pacific Star building, just across the street from DBP’s headquarters in Makati City, given the prevailing “trust issues” between management and the new board.)

Will it work? Let’s watch and learn.—Daxim L. Lucas

Pesos and Sense

As part of its financial literacy advocacy, leading online stock brokerage CitisecOnline.com has thrown its financial muscle behind a new TV program called “Pesos and Sense” hosted by (and produced by the group of) registered financial planner Malaya Laraya. The program, which debuted last September 3 on GMA News TV, will run every Saturdays for 13 episodes from 8:30 a.m. to 9 a.m.

The show aims to demystify the complex world of personal finance and investments and is thus in line with CitisecOnline.com’s thrust of serving the so-called “bottom of the pyramid,” said CitisecOnline chair Edward Lee. The show’s first guest was entrepreneur Bo Sanchez who authored “My Maid Invests in the Stock Market. And Why You Should, Too!’ a book that also spoke highly of Lee’s retail online trading platform.

The Chinoy businessman is very happy with the quality of the first runs of “Pesos and Sense.” As its major financial supporter, the stock brokerage also gets a seven-minute segment in the show where a representative talks about the stock market.—Doris C. Dumlao

Midnight run

One of the highlights of the recent trip of President Aquino to China was the unusual sight of some of the country’s top business leaders in bathrobes, pajamas and slippers bringing down their luggage in the dead of night to the grand lobby of Shangri-La Shanghai. It was a funny but uniquely memorable sight.

The business leaders, men and women, had to be there at midnight upon instructions to deposit luggage before the 5 a.m. checkout to fly from Shanghai to Xiamen for logistics and security concerns, in order not to delay two planeloads of business delegates.

Congratulations to Undersecretary Cristino Panlilio and the DTI-BoI team for the superb job of leading, managing, coordinating and converging the Philippine business delegation.—Tina Arceo-Dumlao

Customs project unsealed?

Last July, Biz Buzz reported about a Bureau of Customs project meant to safeguard cargo in transit using the Global Positioning System. This was welcomed by importers, brokers and other stakeholders, mostly members of the Port Users Confederation who point out that if this project had been implemented earlier, the mysterious disappearance of container vans in transit from Manila to Batangas would not have happened.

Unfortunately, the project itself appears to be headed nowhere as serious concerns about the bidding process have been raised and remained unanswered by the BoC’s Committee on the Accreditation of Service Providers. Top on the list of issues is the composition of the 28-member committee which, sources say, is stacked with people who have present or past links with Societe Generale de Surveillance (SGS), one of the three short-listed companies that submitted bids.

As such, stakeholders are wondering why only the Switzerland-based company has been tapped to do a pilot project when the terms of reference state that short-listed bidders should do a pilot at the same time.

According to our source, SGS has yet to show a sample of the electronic seal, and neither has it proven that it has the expertise and experience to undertake the project. Curious eh?—Daxim L. Lucas

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