Biz Buzz: Treasury shakeup at local unibank

THERE’S a major shakeup happening at this aggressively growing universal bank (which currently stands in the lower bracket of the country’s Top 10 ranking of banks), and we’re not talking about the recent change in the financial institution’s leadership.

Instead, we’re talking about this bank’s treasury group, which is known in the financial industry to be one of the more aggressive and innovative when it comes to trading the market, earning millions for both the bank and its clients. But that may be about to change.

You see, for some reason, this bank had always maintained two separate treasury operations under two treasury heads. One—R1 —was the public face of the bank in the financial markets, often quoted in local and international media outfits, had a big picture in the bank’s annual report and was, overall, a more aggressive trader. Because of this, the previous president of the bank put him in charge of the company’s proprietary trading account, which means he traded its own money, and the bank’s financial fortunes rose and fell with his financial market decisions.

The other treasury head, meanwhile—R2—was a more reserved figure. Age-wise, he is slightly more senior than R1, but is known to have a more conservative style of trading. The previous president put him in charge of “flow trading,” which is basically other people’s money held by the bank.

Inside and out of the bank, people knew that R1 outranked R2 precisely because the company’s funds were entrusted to the former.

Early this year, however, the US Fed-induced temper tantrum caused market volatility to go haywire for a few weeks, resulting in financial losses for many banks around the world, including this local aggressive bank. This resulted in management ordering R1 to stop trading while the bank licked its wounds.

Then came the announcement of a change in leadership at the bank, from a high profile and aggressive banker to a newly hired president who was more reserved and more conservative.

With the dust from that changing of the guard having settled, R1 went to the new president and asked: “When can I resume trading?”

The new president’s reply must have caught him off guard, like a punch to the solar plexus. “Ask the treasurer,” the president said, referring to R2. “Ouch,” thought this bank’s former “primus inter pares” treasurer. Clearly, a power shift had happened along with the change in bank presidents.

So reading the writing on the wall, R1 duly tendered his resignation, which was duly accepted late last week—leaving R2 now as the solo chief of what used to be the bank’s unique “two-headed hydra” treasury department.

Of course, it remains to be seen whether the more conservative and more low-key R2 can match R1’s market-savvy moves. But something tells us, we won’t have to wait too long to find out. Daxim L. Lucas

The return of Joe Sigelman

FORMER AG&P chair Joseph Sigelman will return to the Philippines to rebuild his interrupted business interests after US prosecutors agreed to drop bribery charges against him in a federal court in exchange for him pleading to a lesser charge that carried no jail sentence.

“He will be back next month, and AG&P will be part of his plans,” a source familiar with the American entrepreneur’s affairs told Biz Buzz. “But exactly what his role will be in the firm remains to be seen.”

Sigelman’s legal issues stemmed from a dispute with former corporate partners in Colombia, which led to officials in the company he formerly owned to alert the US government about alleged illegal payments he made to Colombian government officials.

He was arrested by US officials upon his return to Manila from a holiday in January 2014 on the charge of violating the Foreign Corrupt Practices Act (FCPA) and had to relinquish control of AG&P to focus on his legal defense.

The source told the Inquirer that Sigelman was currently “wrapping up business” in the United States and is now in touch with his former partners in the Philippines to plan for his reentry into the local business scene.

“AG&P’s shareholders are excited by this development,” the source said, speaking on condition of anonymity because talks were still ongoing. At present, the company is controlled by a bloc led by the A. Soriano group. It had been scouting around for potential new partners who could infuse more equity prior to Sigelman’s victory in his US case.

According to the businessman’s US lawyers, the nature of the plea agreed between the US government and Sigelman was as significant as the favorable sentence the latter received from the New Jersey federal judge.

“Rather than insisting on an admission that Sigelman knew he was making improper payments to a foreign official (which Sigelman, in fact, did not know), the government accepted a ‘conscious avoidance’ plea that Sigelman would have known had he conducted appropriate due diligence,” said a statement from law firm Quinn Emanuel Urquhart & Sullivan LLP.

“In essence, Sigelman was permitted to plead to a form of criminal negligence instead of actual knowledge,” the law firm’s statement added. “In sentencing Sigelman to probation with no jail time, Judge Joseph Irenas criticized aspects of the government’s case, while comparing Sigelman’s offense to a ‘character flaw’ and praising his prior good works and capacity to create jobs and do good in the future.”

Previous to this, federal prosecutors were asking the court to sentence Sigelman—a former Goldman Sachs investment banker—to as much as 20 years in jail.

Of course, Sigelman’s fans and foes alike are watching closely if he can revive the momentum AG&P lost right after his legal woes started. Watch this space, folks. Daxim L. Lucas

Resto debut

THE GOKONGWEI group, through retailing arm Robinsons Retail Holdings Inc. (RRHI), has debuted into the full-service restaurant business by bringing to the local market Costa Coffee Shop, the biggest coffee shop brand in the United Kingdom. With gourmet coffee shop now an integral part of pop culture, this is the new brand that’s expected to compete with players such as Starbucks, Seattle’s Best, Coffee Bean & Tea Leaf or UCC.

Costa Coffee’s first shop opened about a month ago in Eastwood’s Citywalk 1 in Libis, Quezon City, and market reception had been good, RRHI president Robina Gokongwei-Pe reported during the retailer’s stockholders’ meeting last week. “You should taste our flat white coffee,” she told reporters, adding that this product (described as a coffee drink with a rich, full-flavored coffee with a velvety, smooth texture) was her personal favorite.

Four more Costa Coffee stores are expected to open within 2015 as part of RRHI’s multiformat retail offering. After the first store in Libis, the second Costa Coffee store is set to open in end-July in Robinsons Manila while another will launch in Libis, at the group’s Tera office complex. Another will open in Bonifacio Global City.

Costa Coffee was founded by Italian brothers Sergio and Bruno Costa in Lambeth, London, as a wholesale operation supplying to caterers and specialist Italian coffee shops with their slow-roasted blend Mocha Italia. It branched out to retailing in 1978, when its first store opened in London. In 1995, it was acquired by Whitbread plc, UK’s biggest hospitality company that owns Premier Inn, Beefeater Grill, Brewers Fayre, Table Table and Taybarns.

As originally conceptualized for the local market, Gokongwei-Pe said Costa Coffee could complement the group’s other retail offerings—where the husbands (also boyfriends or dads) could hang out and drink coffee while awaiting their ladies to complete their shopping. So in the near future, she said RRHI could set up Costa Coffee inside the Robinsons Supermarkets. But since the first outlet had turned out “fantastic,” she noted its great potential as a stand-alone business.

This is the litmus test on whether RRHI would add more restaurants formats. “We’ll stick first with Costa Coffee and make sure we run it well before we get into another brand,” she said. Doris Dumlao-Abadilla

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