DBP to file appeal with SEC on alleged ‘wash sales’

MANILA, Philippines – The Development Bank of the Philippines (DBP) will file an appeal with the Securities and Exchange Commission over the questionable sale of P14.3 billion worth of government securities.

Earlier this month, the enforcement and investor protection department of the SEC said that DBP was liable for violations of the Securities Regulation Code.

In a statement, DBP said that the sale was aboveboard and designed to cut losses and save the government financial institution (GFI) from further loss.

The GFI said that the questioned trades were legal, valid and beneficial to DBP, and that the transactions were done to prevent further losses to the bank and ultimately to the national government.

DBP and the LandBank of the Philippines (LBP) are GFIs that have been contributing dividends to the national coffers.

Last year, DBP turned over P2.4 billion to the national government and P2.5 billion the year before.

Officials explained that to preserve DBP’s capital and strengthen its long-term viability, it had to take a hit rather than experience further losses.

In order not to breach the regulatory capital adequacy ratios required by the Bangko Sentral, DBP had to stop the bleeding by selling at a loss and, consequently, book trading losses.

Last March, the Office of the Ombudsman dismissed both the criminal and administrative charges filed against DBP in connection with P14.3 billion worth of government securities.

The DBP Employees’ Union and Association of DBP Career Officials filed the charges with the ombudsman.