Epcib treasury shares

The 11-percent share in Equitable PCI Bank (EPCIB) owned by its subsidiary, EBC Investments, Inc. (EBCII), were acquired during the Equitable Bank and PCI Bank merger in 1999. Payments for these shares were booked mostly in the EPCIB capital account "Capital Paid in Excess of Par Value." It therefore makes sense that if the bank reacquires its own shares as treasury, it should reverse the "Capital Paid in Excess of Par Value" account where the value of the shares was originally stored and not the surplus account which is the norm.

A cursory review of the EPCIB 2005 audited financials show that the "Capital Paid in Excess of Par Value" has a P37.3-billion credit. That is about five times the P7.46 billion needed to reacquire the shares owned by EBCII.

With that much "Capital Paid in Excess of par Value" available, there should be no problem for EPCIB to reacquire the shares owned by EBCII as treasury stock.

On one hand, while it is true that the reacquisition of the 11-percent bank shares held by EBCII will not impair or reduce the bank’s capital, it won’t improve its capital either. With the implementation of the new international accounting standards and the upcoming Basel 2 requirements in 2007, it would be wise for EPCIB to sell the shares owned by EBCII to unrelated parties to improve its total capital position.

The question is: Will the EPCIB board be willing to sell the shares held by EBCII? I think the EPCIB board will be receptive to a plan similar to what was done over at China Bank, where all shareholder families agreed to sell part of their shares to increase the public float, improve liquidity and hopefully improve the price of the stock. Selling the 11-percent EPCIB bank shares owned by EBCII to the market might just achieve that same desired effect. In fact, a few months back, the EPCIB board and executive committee entertained a number of proposals from several foreign investment banks, which included, among others, plans to sell the EPCIB shares owned by EBCII in order to increase the bank’s capital.

On the other hand, in this age of transparency and disclosure, the EPCIB board might not be willing to sell to unnamed "ghost" investors. Certainly not, after the several postponements and failed biddings.

Marketing is a crucial piece of the corporate puzzle. This is where strategies are laid out to drive consumers to your products. A key objective of marketing is to build a brand. The stronger your brand, the more successful your product can or will be. In many cases, not even lowering the price can beat products with strong brands. A classic example is the pharmaceutical industry. I thought that when generic brands were launched, their branded counterparts would immediately fall. It has been over five years since generic drugs have been launched, but branded drugs continue to dominate the market.

Importance of positioning

Come June 23, a master in branding will come to Manila . Al Ries, who wrote the classic marketing book "Positioning" will talk about the latest principles of marketing and branding. Though he wrote the book about 25 years ago, the principles of "Positioning" remain to be a "must-learn" for every marketing and advertising practitioner.

I recently received a forwarded speech delivered by PLDT retail business head Butch Jimenez to the graduating class of Silliman University. He used the marketing principles of Al Ries based on the book "Positioning" and related it to how the new graduates must "position" themselves to reach the top. Word is that the speech is so widely circulated that even Al Ries himself was forwarded a copy who in turn forwarded it to his Philippine organizers.

I asked permission from Butch if I can re-print the Al Ries portion. A timely reminder for fourth year college students who will be entering the workforce next year. Here it goes:

"Success in marketing is a battle to be the first in the mind of the consumer. That is the principle proposed in the ‘80s by two authors, Al Ries and Jack Trout, in their classic book, "Positioning." If you are first in the mind of the consumer, in most cases, you will rise to the top and become the leader or number one.

"Let’s give a couple of examples. When I say cola, what comes first in your mind? It’s Coke. And today, Coke has risen to the top and is number one. When you say beer, the first thing that comes into your mind is San Miguel. They are first in the mind, they are at the top, and they are the leader. Let’s try something more hip for the new generation kids. When you say mp3 player, what’s first in your mind. I can actually read your mind. The iPod. They are first in the mind, they are at the top, and today, they are number one.

"So, in many instances, the rule actually works. If you want to rise to the top, you have to be the first in the mind.

"The second thing that Al Ries and Jack Trout talked about, aside from being the first in the mind of the consumer, is burning an attribute or a characteristic in the minds of the consumers.

"For example, Volvo did that. They burned into the mind of the consumer the attribute of safety. If you want a safe car, Volvo is it. iPod, for example, is burning in all our minds the attribute of being cool. They want to drive into our minds that the Ipod is the coolest gadget in the universe today.

"So, two concepts we learn from marketing to reach the top: Be the first in the mind and burn an attribute in the mind. Then, you start rising to the top.

"So what does this all mean to you, as you go out into the workplace? If you guys want to start rising to the top, you have to do the same thing. You have to be the first or the top of mind amongst the people that you work for, especially your boss. When the boss needs something done, you have to be the first in his mind. If you’re just the third, or the fourth, or the fifth, or the tenth in his mind, you’re just like a company that is in third, fourth or fifth position – far, far away from rising to the top.

"But like I said earlier, being top of mind is not enough. You also have to burn an attribute in his mind. Now, a slight word of caution. Burning an attribute in your boss’s or co-worker’s mind is a double-edged sword. You have to make sure that you burn a positive attribute and not a negative one. Ries and Trout explain that it is very difficult or next to impossible to dislodge an attribute in one’s mind once it has been established. If you go into the workplace and the attribute you burn in your boss’s mind is tatamad tamad ka (you’re lazy), mahirap kang pakisamahan (you’re not a team player), or di ka mapagkakatiwalaan (you’re not trustworthy) then chances are, that attribute will stick in his mind for years to come and you’ll have a hard time rising to the top.

"So, key lessons if you want to rise to the top are, you have to be the first in their mind and you must burn positive attributes in their mind." (If you want to read the full speech, visit www.butchgjimenez.blogspot.com)

Al Ries’ Brand Marketing Conference will talk on how to position your brand to penetrate the consumer’s minds, how to create powerful brand strategies that stun the competition, eliminating the barriers to global branding, and more. If you want to learn how to generate strong brands and develop an edge against your competitor, this conference is a must. I heard the tickets are about 90 percent sold out, but try and call 849-6977 if you are interested.

Not so hidden agenda

World Cup fanatics are scrambling for the remaining tickets sold at exorbitant prices, amounting to as high as 6,850 (euros) or approximately P470,000 for a front-seat at the tournament’s championship game.

Most of the 2.93 million tickets for the 64 matches at the 2006 FIFA World Cup in Germany have been sold, but some made their way to online auction houses, where prices were raised by up to ten times from their original prices.

Despite the warnings of being turned away from the stadium, World Cup fans are still bidding for tickets at online auction houses such as ticketcity.com where the price for a front-seat ticket at the championship game was set at 6,850 euros. At Clickit Ticket, it was set at $6,500.

Original ticket prices set by organizers were 120 to 600 euros (P8,000 to P40,000) for the World Cup final and the cheapest tickets were $35 to $100 (P2,400 to P6,800) for group matches. For the opening match between the host Germany and Costa Rica in Munich on June 9, ticket prices were originally sold at 65 to 300 euros (P4,400 to P20,000).

One independent ticketing company, ticko.com, however, was selling an individual ticket for the opening match at $1,905 (P130,000).

Germany is hosting the world’s most dramatic sporting event, with the 64 matches to be held in 12 German cities from June 9 to July 12, 2006.

World Cup fanatics in the Philippines, however, do not have to shell out hundreds of thousands of pesos to watch a single game.

Dream Satellite TV is bringing the full excitement and intensity of the 2006 FIPA World Cup to the Philippines through its affordable pay-per-view packages.

With its all-digital, direct-to-home (DTH) TV broadcasting service via satellite, Dream Satellite TV have dedicated pay-per-view channels for the 64 live World Cup matches.

According to Gerry Castro, Dream’s VP for marketing, for a one-time package fee of P3,000, subscribers can watch all the 64 matches in the entire 31-day competition including replays. Subscribers however have the option to pay only P500 for a one-day game. For more information about Dream pay-per-view, you can call 918-8000.

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