By Ellson Quismorio
It’s a bad idea.
That’s basically what House of Representatives official Leyte 2nd District Rep. Henry Ong thinks about the Land Bank of the Philippines’ desire to acquire a majority stake in the Philippine Dealing System Holdings Corp., citing a possible conflict of interest.
Ong issued a statement on Friday dissuading the state-run lender bank from going ahead with its plan, which incidentally was given the green light by its board some two weeks ago.
“As Vice Chair of the House Committee on Banks and Financial Intermediaries, I counsel against the interest of the Landbank of the Philippines in acquiring a majority, controlling stake in the Philippine Dealing System because of the significant potential for conflict of interest and unwarranted government and political intervention in the foreign exchange market,” Ong said.
The businessman-turned-lawmaker said potential problems with this setup will mainly come from the nature of how Land Bank officials are picked.
“Appointments to the top leadership of the Landbank, as with other state firms, includes the reality of political factors. This is where the prospects for complications can arise and carry over into the PDS,” Ong noted.
Founded in 1997, the Philippine Dealing System (PDS) is the country’s fixed-income trading platform.
It had earlier been reported that Land Bank wants to acquire at least 66.67 percent of the shares of the Philippine Dealing System Holdings Corp., which is the holding firm of PDS.
“Rather than risk the complications, it would be prudent of the Land Bank to rethink its plans before proceeding any further,” Ong warned.
The Visayas solon suggested an alternative action for the government bank wherein it could only get a smaller but still influential stake in the trading company.
“If the interest of the Land Bank in the PDS is purely on the investment potential, a minority but influential stake would be enough to achieve the profit goals of the Land Bank without the unnecessary complications of conflicts of interest, and window for meddling in the peso-dollar rate and the market for long term bonds,” Ong said.
This advice notwithstanding, the committee vice chairman reckoned that controlling interest in the PDS is better left to the private sector.
“The Bangko Sentral ng Pilipinas (BSP) has enough potent tools and various means of persuasion to step into the forex (foreign exchange) market without the complications the Land Bank could wade into if it pushes through with the intent to acquire majority stake in the PDS,” Ong said.