Land Bank chief seeks controlling stake in bond exchange

Liza Reyes, ABS-CBN News

Posted at Jan 19 2018 09:57 AM | Updated as of Jan 19 2018 11:57 AM

MANILA - (UPDATE) The president of state-run Land Bank of the Philippines said Friday he sought board approval to acquire a majority stake in the country's bond exchange.

Land Bank wants to own at least 66.67 percent of the Philippine Dealing System Holdings Corp. It currently holds 1.56 percent thought the Banker's Association of the Philippines, according bank president Alex Bueventura's letter to the board.

Bunaventura confirmed the letter to ABS-CBN News, adding, "The objectives are to increase Land Bank profits and to accelerate development of capital markets in the country."

The Land Bank's move came as the PDS and the Philippine Stock Exchange addressed hurdles to their planned merger.

PSE addressing issues in merger with bond exchange: SEC

Land Bank will benefit from the "steady recurring cash flow" that the PDS generates from fees, Buenaventura told the board in his letter.

High economic growth, a maturing fixed income market, growing sophistication among local investors, and financial integration in Southeast Asia make the PDS an "attractive business model," he said.

Having a controlling stake in the bond exchange will also create "synergies" with the bank's activities as a dealer of government securities, he said.

Based on the share purchase agreement between the BAP and the PSE, the PDS had a valuation of P2 billion and a price-to-earnings ratio of 8.10 times based on 2016 results, he said.

Buenaventura sought authority from the board to engage the Development Bank of the Philippines, another government-run bank, as financial adviser to facilitate the PDS acquisition.