The Market Monitor Minding the Nation's Business
By Riza Lozada
Pension fund Government Service Insurance System (GSIS) continues to be hounded by problems in selling its GSIS Family Bank (GFB) unit, as bidders wanted an assurance that the 20 branches of the bank would retain its privilege of being exempt from paying licensing fees.
The Bangko Sentral ng Pilipinas (BSP) has yet to release its decision regarding the proposal for the GSIS banking unit to retain its character as a government entity as an incentive for buyers.
In a document obtained by The Market Monitor, bidders raised several issues during a conference prior to the May 25 bidding of the GFB.
Bidders were also interested to know whether the GSIS would pull out its P500-million deposit once the bank is sold, to which the GSIS Investments, Bids and Awards Committee (IBAC) said it had no authority to decide regarding the matter.
In April IBAC started to offer all the shares directly and beneficially owned by the GSIS, including 25.15 million common shares.
IBAC Chairman Severina Resurreccion said the minimum bid price for all shares of the GFB was valued at P501 million at least.
The bidders also about the GFB’s privilege of being a government depository bank and asked whether this will continue after its sale.
IBAC assured the prospective buyers that the GFB has an existing authority from the BSP to accept deposits from the GSIS and this will continue until the authority is revoked by the BSP.
The prospective bidders were also informed that the GFB would retain its thrift banking license in the event that the winning bidder is not a commercial bank.
The BSP had granted to the GFB the retention of its thrift banking license if the winning third party investor is a commercial bank (Section II, E.3. Page 4 of the Bidding Rules and Procedures), the bidders noted.
The IBAC also clarified with the bidders that the GSIS would not assist in the resolution of a court dispute representing the heirs of former Cavite Rep. Renato P. Dragon, who used to own the failed Royal Savings Bank that the Dragon family said the GSIS failed to rehabilitate.
The sale of the GSIS shares in GFB would include the remaining shares of the bank belonging to the minority private stockholders represented by heirs of Dragon through Patricia Angeli D. Nubla.
These “shall likewise be sold to the same buyer of GSIS shares through a separate negotiation and agreement with said Private Stockholders. This condition is in compliance with the Court Order dated 17 October 2014, issued by Branch 58 of the Regional Trial Court of Makati City, approving the Conditional Consent dated 8 October 2014 in Civil Case No. 03-433” according to the IBAC bid invitation.
The IBAC said that the bidders “should negotiate with the Private Stockholders before the bid date [25 May 2015] to be included in the Certification issued by the Heirs of Renato P. Dragon as to potential buyers of the Private Minority Stockholder’s Shares.”
The IBAC said that all other unresolved issues with Dragons’ shares would be resolved separate from the sale.
The bidders were confused about the two awards—one by the IBAC and the other by the private stockholders represented by the heirs of Dragon but the Ibac said that one award will be made for all equity shares of the GSIS.
The IBAC likewise told bidders that in the event of failed bidding, the subsequent offer through negotiated sale can be considered subject to the approval of GSIS management and its board.
The committee declared that it would not open bids but declare a “failed bidding” once the certification of Dragon heirs on minority shares contains only one potential buyer.
The IBAC said a foreign non-bank with a Filipino partner is eligible to bid. A foreign non-bank may have a maximum 40-percent share in the consortium, it added.
The committee could not give exact figure on the number of shares held by the Dragon noting that due diligence of the bank would establish this matter.