Impunity in the Philippines

Who wants Union Bank? Not us, say BPI, RCBC
Two local universal banks denied a reported stock market rumor that they are interested in Aboitiz-led Union Bank of the Philippines

MANILA, Philippines – Two local universal banks issued a blanket denial of a stock market rumor that they are interested in Aboitiz-led Union Bank of the Philippines. 

In separate disclosures to the stock exchange on Monday, February 27, Aboitiz Equity Ventures Inc (AEV), Union Bank, Bank of the Philippine Islands (BPI), and Rizal Commercial Banking Corp. (RCB) denied a blog post that negotiations are on-going.

“The…blog post by Mr. Gus Cosio is not true. After seeking confirmation from our Director Mr. Erramon I. Aboitiz who is also the President and Chief Executive Officer of Aboitiz Equity Ventures, Inc. (AEV),” Union Bank said in its disclosure.

AEV, the listed holding firm of the Aboitiz family, is the controlling shareholder in Union Bank.  

“This is to deny current market talks of a possible merger between UBP and BPI or RCB. Aboitiz Equity Ventures, Inc. (AEV) is not in any way involved in discussions with any person or entity for the sale of its shares in UBP or in a merger between UBP and BPI or RCB,” AEV wrote separately.

The reported buyers, BPI and RCBC, also issued separate denials.

“We are also not aware and do not know the basis of the market talk of a possible merger. For your information, BPI is not in discussion with the institution indicated above at this point in time,” BPI wrote.
“We are note aware of any discussion on this matter. Information other than those disclosed by RCBC is purely speculative,” the Yuchengco-led RCBC said.

Market talk

The blog post of Gus Cosio published on February 23 triggered the exchange to ask the above banks for explanation.

“The spark of the sell-off was AEV due to a market talk of a possible merger between UBP and BPI or RCB,” he wrote.

Cosio is currently president of mutual fund firm First Metro Asset Management Inc. (FAMI).

This is the rest of his post:

“Given the wide bid/ask spread of AEV, the stock rocketed to Php 59.9 contributing 56 points to the index and the PSEi hit all-time high. Some analyst had placed AEV’s NAV to be around 60 should UBP end up in a merger at twice its book value. It is not unusual that when a target price is reached, both swing and arbitrage traders would start to sell. Similarly, the sell targets of foreign algorithm traders were likely triggered. The price which was .10 shy of 60 was too attractive to resist prompting the drop since the rise in AEV appeared to have been exacerbated by the speculation of a merger.  UBP swung from a low of 90 to a high of 125 putting AEV completely out of whack. The move in AEV gave the rest of the market an excuse to take profits simply because so much profits have been made in all sectors of the market.  Of course, in a profit-taking sell-off, hardly anyone is spared. Stocks that have been trading at their all time high – and there are many of them – were sold as both traders and fund managers moved to protect earlier gains.”  


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