Landbank eyes majority stake in Phl Dealing System

MANILA, Philippines — State-run Land Bank of the Philippines is planning to acquire a majority stake in the Philippine Dealing System Holdings Corp. (PDSHC), a move seen to increase its profits and strengthen the local capital market.

Based on a document acquired by reporters, Landbank president and chief executive officer Alex Buenaventura is seeking the board’s approval to buy at least 66.67 percent of PDSHC’ stocks.

“The undersigned recommends to the board the acquisition by Land Bank of the Philippines of a majority stake or at least 66.67 percent of the Philippine Dealing System Holdings Corp. (PDS),” according to Buenaventura’s letter dated Jan. 16.

Sought for confirmation, Buenaventura said the proposal would be submitted to the Landbank board for approval on Jan. 23.

“The objectives are to increase Landbank profits and to accelerate development of capital markets in the country. (The proposal is) very likely to be approved,” the bank official said in a text message.

Should the acquisition push through, Buenaventura said the “PDS will no longer be merged with the PSE (Philippine Stock Exchange).”

Landbank owns 1.56 percent of PDSHC through the Bankers Association of the Philippines (BAP).

Buenaventura, in his letter, said PDS is currently undervalued at P320 per share (based on a June 15 share purchase agreement of BAP and the PSE) and that purchasing PDS shares could prove to be a profitable investment for the LandBank.

“Moreover, Landbank will benefit from stable recurring cash flow from the various fees PDS charges to market players as the country’s central securities depository and fixed-income exchange,” Buenaventura said.

He said over 70 percent of PDS’s income is from the provision of services as a depository, registry, and financial intermediary, while over 20 percent come from trading services. Buenaventura said the latter is an area of opportunity as the local bond market continues to mature.

“The maturation of the domestic fixed income market, improved financial sophistication of local investors, ASEAN financial integration, and a high growth economy underpinned on infrastructure development make PDS an attractive business model. We also foresee potential synergies with Landbank’s treasury operating activities as a government securities eligible dealer,” he said.