Just a day after the Philippine Stock Exchange (PSE) made known its plan to acquire the Philippine Dealing System (PDS), state-owned Land Bank of the Philippines (LandBank) said it has started its own due diligence audit of the PDS.
In a statement, LandBank President Alex V. Buenaventura said he had a “very fruitful meeting with the Securities and Exchange Commission [SEC], to discuss the procedure for applying for a petition for exemptive relief with the regulatory body.” This has to do with LandBank’s main regulator in the Bangko Sentral ng Pilipinas rather than the PSE.
The statement came after the PSE on Monday announced the completion of its stock rights offer that formed part of the bid to acquire PDS Holdings Corp. (PDSHC)LandBank said the meeting was held only five days after Buenaventura wrote to the SEC, requesting for a meeting to discuss the application process for an exemption under Section 33.2 of Republic Act (RA) 8799, also known as the Securities and Regulations Code.
“The LandBank Board, on January 23, 2018, approved in principle the acquisition of at least 66.67 percent, or a controlling interest of PDSHC. 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.
LandBank’s plan to acquire more than three-fifths of PDS rivals the PSE’s proposed merger with the fixed income market.
Landbank currently owns 1.56 percent of PDSHC through the Bankers Association of the Philippines.
Earlier, LandBank bared its plans to acquire 66.67 percent of PDSHC in hopes of increasing the bank’s profits and help accelerate the development of the domestic capital markets.
The PSE has also been proposing to merge with the PDSHC, where it already has 69.03 percent of the shares after signing a series of share purchase agreements with stakeholders.
According to Finance Secretary Carlos G. Dominguez III, LandBank needs to continue subsidizing farmer loans.
“LandBank does need profits so it can continue to subsidize farmer loans so [this] is a valid purchase. Plus, [this] will allow the government to push ahead with a [more] inclusive capital markets.
In simple terms, we would like to use the PDS to promote the use of bonds for medium industries to tap the capital markets. Right now, they only really have to go to banks to borrow,” Dominguez told financial reporters.