The government may establish its own bond exchange if negotiations between state-run Land Bank of the Philippines and Philippine Dealing System Holdings Corp. to buy a controlling stake in the latter fails, Finance Secretary Carlos G. Dominguez III said.
“If they don’t want to sell, it will be very clear now who doesn’t want to develop the capital market, and who are those shareholders of PSE [Philippine Stock Exchange] and PDS,” Dominguez told reporters last week, as Landbank already offered during a 30-day period, P360 a share to PDS shareholders, including PSE, to take control of the bond exchange.
Thus far, there has been only a few takers, Landbank president and chief executive Alex V. Buenaventura had said.
“Now that is not going to stop us from doing other things—we can promote the bond business ourselves. If they don’t want to sell, we will set up the bond system. We can do it,” Dominguez said.
In particular, Dominguez said the state-run lenders Landbank and Development Bank of the Philippines, both universal banks, could establish units that would promote bonds to micro, small and medium enterprises.
“It’s easier for us to do it through them (PDS), but if they don’t want to cooperate, that’s not going to stop us,” the finance chief said.
“It’s still our mandate to improve the capital market. We are making a fair offer—if they don’t want to sell, we cannot force them; we will not confiscate the shares from them. But it will be very clear to the public who doesn’t want to develop the capital market,” he said.
Dominguez lamented that the PSE already took about five years to comply with the law so that it could merge with PDS and foster capital market development, but was still unable to do so.
“The law says that only 20 percent of the shares of PSE can be owned by brokers, so just comply with that, that’s all. We are not forcing them to do anything—we are begging them to comply with the law. Can you imagine, a country begging, ‘please follow the law.’ We are giving them the chance—we gave them 18 months to do it, and apparently this has been going on for five years now. Should we wait around until people decide to comply with the law? We are not asking them anything unreasonable,” Dominguez said.