LandBank starts ‘due diligence’ to acquire majority stake in fixed-income bourse

MANILA, Philippines — State-run LandBank of the Philippines on Tuesday said it has started conducting its “due diligence” in its plan to acquire a majority stake of the Philippine Dealing System Holdings Corp., operator of the country's bond and currency markets.

In a letter dated January 16, LandBank President and CEO Alex Buenaventura sought the board’s approval for the acquisition of at least 66.67 percent of the PDS.

The Landbank board of directors later gave a green light to the move during a meeting last January 23, putting the state bank in competition with the Philippine Stock Exchange in this regard.

READ: LandBank eyes majority stake at Philippine Dealing System Holdings Corp.

In a statement, LandBank disclosed that Buenaventura had a “very fruitful meeting” with the Securities and Exchange Commission last January 29.

The state-run lender said the meeting zeroed in on the procedure for applying for a petition for exemptive relief from industry ownership limit for Exchanges and Exchange Controllers under the Securities Regulation Code.

“With the Board approval, the only thing left to do is to finish our due diligence and report to the Board,” Buenaventura said.

“We thank the SEC for accommodating our request, even on short notice. Rest assured that we will comply with all applicable laws in acquiring PDS,” he added.

In his letter to the board, Buenaventura said the LandBank, the country’s fourth-largest lender in terms of assets as of September 2017, will benefit from “stable recurring cash flow” from fees that PDS charges to market players.

Currently, the LandBank owns 1.56 percent of PDS through the Bankers Association of the Philippines.

LandBank’s planned acquisition came as the PSE continues to increase its stake in the fixed equities bourse.

Finance Secretary Carlos G. Dominguez III — ex-officio chairman of the lender’s board — earlier singled out the PSE, which he said was not compliant with the law.

“Around September of 2016, I told PSE to be compliant with the law with regards to the allocation of their share to groups of shareholders as a condition to SEC’s approval of their plan to acquire PDX,” the finance chief said in a Twitter post.

”As of now, 16 months later, they are not compliant. The development of the capital market is being slowed down by the PSE’s inability to be compliant with the law,” Dominguez added.

”The Duterte Administration will no longer tolerate private institutions thwarting the goal of achieving a robust & inclusive financial system.”