Biz Buzz: P1M penalty

The Philippine Stock Exchange has to fork out a cool million pesos (again) after the Securities and Exchange Commission denied its request for reconsideration of a P1-million penalty for an alleged violation of its board election rules. In a disclosure on Tuesday, the PSE said it received a letter dated July 4 from the SEC requiring payment of the penalty within five days.

To recall, the SEC castigated the PSE and its nomination and elections committee for allowing to run during the elections in May eight candidates representing institutions that had less-than-perfect Securities Regulation Code compliance records. Based on the original SEC order, these candidates were from San Miguel Corp. (who had withdrawn from the race before the election), The First Resources Management & Securities Corp., Summit Securities Inc., RTG & Co. Inc., Lucky Securities Inc., IGC Securities Inc. and Asia Pacific Capital Equities & Securities Corp.—Doris C. Dumlao

Debunking a coco levy myth

There seems no stopping so-called “progressive groups” and critics of San Miguel Corp. from screaming bloody murder at the recent decision of the Supreme Court declaring the holdings of SMC chairman Eduardo “Danding” Cojuangco Jr. as legally acquired.

Of late, however, a little known fact has emerged: a Commission on Audit report prepared a few months after the Edsa Revolution showed that only half of the often quoted P9.6-billion coco levy fund at that time was administered by United Coconut Planters Bank (from which Cojuangco allegedly got the money to buy SMC shares).

According to the COA report, as much as 30 percent of the coco levy fund had actually been used by the Philippine Coconut Authority to stabilize (i.e. subsidize) the prices of cooking oil and laundry soap, which were skyrocketing at that time due to global demand.

The rest of the money went to Cocofed (P905 million) and the United Coconut Oil Mills (P1.1 billion), while only P4.7 billion went to UCPB—used to invest in various coconut industry-related firms.

These facts—disclosed to Biz Buzz by some people with very long memories—call into question the accuracy of critics’ claims that Cojuangco’s SMC shares were bought with UCPB’s coco levy funds. And the person who prepared the audit report? No less that President Cory Aquino’s COA chief at that time, Teofisto Guingona.—Daxim L. Lucas

Asian banks on the prowl

A number of big Asian banks are building empires across the region and some of them just can’t ignore the opportunities in the Philippines. A potential wave of local banking mergers and acquisitions involving not just the local big boys but also their bigger regional banking peers is indeed shaping up, according to M&A experts.

Malaysian banking giants Maybank and CIMB Group are among those seen raring to expand here, according to our source, who has handled a lot of eye-popping corporate M&As. Recently, Maybank agreed to raise its stake in ATR KimEng Financial Corp. to 75 percent from 42.4 percent, buying out the shares of Filipino shareholders (ATR Holdings led by Ramon Arnaiz, Manuel Tordesillas and Lorenzo Roxas) who will, however, remain as Maybank’s partners in the capital markets business. But a further aspiration is to grow its 45-branch local commercial bank subsidiary Maybank Philippines. Maybank is racing against rival CIMB to grow business in Southeast Asia and the Philippines is of course part of the roadmap, the source said.

And if the Malaysians acquire new banking platforms, the M&A expert said Singapore’s DBS Group could not be far behind. DBS, which only has a representative office in Manila (after its local banking operations were folded into BPI Family Bank in 2001), is a strategic partner in BPI. If other regional banks start expanding in a big way, the source said DBS might be encouraged to make a move as well.

Then of course there’s Chinese banking giant ICBC, which has been seeking investment opportunities for a long time and is in talks on an alliance with one of the country’s wealthiest men. The prospective partnership between Allied Bank and ICBC (which wouldn’t have been allowed to reach due-diligence phase if it were only a “speculative” proposition) is an open secret within the Lucio Tan group of companies. It’s only a matter of time, our sources say.—Doris C. Dumlao

Bank for sale

And because ICBC has set its sights somewhere else, the state-run pension GSIS is rethinking its options for GSIS Family Bank, which a few years ago was almost engaged to the Chinese banking giant. Because divesting its interest in banking (to focus on core operations) is still part of the strategy of the new GSIS leadership, the pension fund is now making plans to sell the thrift bank through a public auction. This will happen in the next four months, a GSIS source said.

Now that there’s keener interest in banks especially among those wishing to foray into the business for the first time (as proven by the successful auction for PBCom that was won by the group of Marcos trade minister Roberto V. Ongpin), the GSIS has a good chance at likewise getting a new investor for its banking unit. The pension fund has chosen the state-owned Development Bank of the Philippines as financial adviser on the prospective auction.—Doris C. Dumlao

Southwoods reformers unimpressed

The so-called Reform Group that has been instrumental in shaking up things at the controversial Southwoods Golf and Country Club on Tuesday pooh-poohed the promise of Southwoods chairman Bob Sobrepeña to call for fresh elections in 90 days.

Instead, the group—composed of members who, by most accounts, can no longer take the steady decline in the fortunes of their club—has called on the businessman to resign immediately and allow his successor to administer the new elections for board directors.

In an open letter distributed to some members of the media, the reform group asked why there was a need for a new round of elections when Sobrepeña had “actually lost” in the previous elections that the latter allegedly prevented from happening.

“We read your letter explanation, which is lame and few would give credence to,” the group’s letter said. “We are sorry to take your view with a grain of salt because your record in Southwoods reflects actions all intended to keep you in control of the club … and more so, control of its funds.”

The group lamented that Sobrepeña had promised them reforms a long time ago, in exchange for their silence, but little did they know that the Fil-Estate chairman merely needed the peace to be able to seal a deal that would bring in Megaworld’s Andrew Tan as an investor in the firm.

“We believed you and you failed us then,” the group said. “And now, you have failed us again.”

Looks like the controversy is far from over.—Daxim L. Lucas

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