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Anatomy of the all-Filipino investment bank |

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Anatomy of the all-Filipino investment bank

HINDSIGHT - HINDSIGHT By Josefina T. Lichauco -
Bill Hewlett, one of the founders of Hewlett-Packard (HP), upon the death not too long ago of his long-time friend and partner in business, David Packard, said: "As far as the company is concerned, the greatest thing my friend and partner, David, left behind him is HP’s core ideology which has guided the company since its inception, more than half a century ago." Hewlett mentioned that HP’s core ideology consisted of a deep respect for the individual, a dedication to affordable quality and reliability, a commitment to community responsibility and a dedication to make technology contributions for the advancement and welfare of humanity. It is well known that Packard himself bequeathed his US$4.3 billion of Hewlett-Packard stock to a charitable foundation.

The sober business world knows quite well that it is the core ideology that holds an organization together. You discover core ideology by looking inside. Somebody said, "It has to be authentic... you can’t fake it; and it needs to be meaningful and inspirational only to people inside the organization; it need not be exciting to outsiders."

One excellent example that shines brilliantly and splendidly in this light is an investment bank, an all-Filipino company founded close to 30 years ago in 1972 just before martial rule was inflicted on our nation. Multinational Investment Bancorporation (MIB) is made up of extremely idealistic men and women who, as one partner, Cesar Crisol says it today, "wanted to sail east in order to reach the west." The incredible thing about MIB’s birth, however, was that no one really believed it could be done. What made the only all-Filipino investment bank survive, and survive magnificently, was its core ideology. Idealist Malou Cristobal, one of its partners who has been with the firm almost from inception, says it so well now: "We were driven by a shared ideology – the vision, the philosophies." And these are the following: total personal commitment, total self-reliance, an absolute absence of conflict of interest, the corporate partnership, the excellent system of meritocracy, the incredible and uniquely capitalized situation where its human resource was equated as human capital, in effect, redefining capital as the "value flow of an individual’s contribution." Crisol now very rightly says: "This allowed individuals – regardless of educational, social and economic status to have the opportunity – to be stakeholders in the partnership." Romeo Rodriguez was a very young investment specialist when he joined the "Gang of Five" that left Bancom, and who I met, if memory serves me right, back in 1983 when he took a look at a Luna painting of mine that I wanted to sell. I did not know then why it was he who went to view it. I am finding out now that MIB does in fact invest in the work of Philippine masters.

He now expounds on the personal stake of the MIB partners: "With our personal assets at stake, we make it a point not to engage in questionable transactions. Our papers are all fine. We do not deal with companies with low credit ratings. We also avoid cases of conflict of interest. The institution is our priority." Cesar Crisol describes the concept of Corporate Partnership: "As partners, they had to risk all they had to backstop not only decisions they made, but also to cover conflict-of-interest situations. To a large extent, this formula gave clients that level of comfort to deal with the company, knowing full well that the transparency of the deals and activities of the officers assured them of the best alternatives."

This is the first time Multinational agreed to be featured in a newspaper or magazine of general circulation. This all-Filipino investment bank was only about six years old when I really first got to know what made it tick. What indeed was that X factor that had propelled this investment bank and its founding partners to the kind of prominence they achieved in just six years of their existence then? It was in 1978 when I first read the opening lines of the Multinationale, MIB’s anthem: "Let us dream of a world, of a future we can share...," which the MIB force still sings every Friday and still relishes doing so. As Cristobal says it now, "It was almost a religion! What drew us to Multi was its quixotic appeal. The odds were stacked against us. We were driven by a passion to overcome hurdles, to prove ourselves right, to achieve our objectives through an untried and untested route. Multi’s core ideology answered the yearning to do something different, to challenge the status quo, to do something pioneering, to follow the man who was the institution’s grand architect."

The man Malou is referring to is MIB’s chairman of the board, Ramon K. Ilusorio, leader of the "Gang of Five" who decided to quit a highly successful institution at that time, Bancom Development Corporation, to blaze that revolutionary trail in the "conservative world of investment banking" – five young idealists then, extremely nationalistic, with staunch democratic ideals, their compelling objective was to put up an all-Filipino institution, "a company of the people, by the people, and for the people," devoid of any foreign interests. In 1997, Ramon Ilusorio, celebrating MIB’s silver anniversary, said: "I am proud of what we have done institutionally, such as the creation of the money market. Through Multinational, we were able to prove beyond doubt that the concept works. We have proven that you can create capital without having capital to start with. And to think that we operate in a capital intensive industry, the industry of capital itself." In the book Different... From All of the Rest, published in commemoration of MIB’s 25 years since its founding, writer-researcher Bayani San Diego Jr. writes, "To make the victory twice as sweet, Multinational did it on its own terms, without outside stockholders, without foreign or local investors, without family support, without government backing, without advertising or PR. So much done in just 25 years, and with so little. It boggles the mind to imagine what Multinational can do 25 years hence, with its current resources, its sterling reputation, and the undiminished brilliance or zeal of its partners and associates."

I myself believe that one basic reason for MIB’s incredible success has been the kind of person Ilusorio is. A very private man who shuns publicity, his most senior executive assistant, Ruby Gutierrez, has not only been, through all these years, exceptionally dedicated to the chairman and the firm, but her devotion to the privacy principle has been exemplary. Ilusorio, credited for having organized Bancom’s money desk, for having started and institutionalized the Philippine money market, having designed the Philippine Treasury bill, set up the first investment bank in Thailand and the first regional merchant bank in Hong Kong, found an initial place in history upon winning a TOYM award for merchant banking. The TOYM article on him stated: "Nobody thought of exploiting the fact that, at one time or another, some corporations and even individuals do have surplus funds, while other companies have deficits. What was needed was an institution that would serve as a clearing house to channel funds from the surplus areas to those with deficits."

On the eve of the awards, Ilusorio referred to "the breathtaking world he saw beyond the darkness of the unknown." Someone had written at one time, that "the darkness was an opportunity for exploration, the unknown was virgin territory waiting to be staked out and claimed." If there has been anything or anyone that has truly seduced Ilusorio, the single man, it has been the unknown. Virgin territory has always been exciting for him. In July 1996, he became the first Filipino to reach the North Pole, and the first person to complete the North polar crossing from Europe to America.

Eduardo Rojas who, as a neophyte trader at Bancom, decided to sign up with the Gang of Five in 1972, reminisces that most everyone said they would not survive. "The prevailing thinking then was that you had to be big and owned by a large foreign company, that you must have at least 100 years behind you. But those who claimed they had it all covered because they had foreign partners and local capital, those who said we would die, are no longer around." As a young trader at the time of Multinational’s outstanding "escape" from the Continental Bank crisis in 1974, Ed Rojas, in his more than three decades in the business now says with conviction that, "The law of the market has remained unchanged. And that law is the law of change. You must constantly keep your ear close to the market. That is why information is our lifeblood." Rojas firmly states that, "We are lenders to the interbank market. We are always liquid. That’s because we have always been very selective on credit. That’s our advantage. The minute we smell smoke, we move out before the fire breaks out."

The "Corporate Family" philosophy is a secondary pillar of MIB, and is a means to relate family interest with institutional interest. In exchange for the family’s assimilation into an associate’s corporate life, MIB recognizes the increasing needs of family members. Such an assimilation or integration, if effective, will produce a "seamless dynamism between the enterprise and the family through the individual associate as the sole or principal channel for the enhancement of the objectives of all three parties. Seamless dynamism or real synergy proves that one plus one plus one equals four or more." "Involvement without interference," however, is the corporate family’s main maxim.

Ilusorio explains that Multinational’s motto is "Dictum nostrum pactum" or "Our word is our bond...Word of honor. If I say I’ll pay you tomorrow, I’ll pay you tomorrow, no matter what." This is an achievement of MIB he is very proud of... "We have never reneged on any payment. We never delayed anything. We have never violated any contract." And this indeed is exemplary – in the troubled world of Philippine business.

And he explains the essence and system of what is called "Verbal Banking." He says that it is in fact putting into practice the ideal of "social capital," and continues, "If we can do this countrywide, we could create a most dynamic society. When people trust each other, you don’t have to waste so much time and resources checking out your business associates. There will be no need for auditing, credit investigation, accounting. Your word is good enough." Ramon Ilusorio feels that verbal banking is MIB’s greatest contribution to the country." (To be continued)

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