Bulatlat - The Philippines's alternative weekly newsmagazine

This story was taken from Bulatlat, the Philippines's alternative weekly newsmagazine (www.bulatlat.com, www.bulatlat.net, www.bulatlat.org).
Vol. VI, No. 8, March 26-April 1, 2006

Merger of 2 Banks Detrimental to SSS, GSIS Members

What does a merger of two banks have to do with members of the Social Security System (SSS) and the Government Service Insurance System (GSIS)? A lot, according to two labor groups.

BY JHONG DELA CRUZ
Bulatlat

The so-called mall magnate is increasing his economic influence by expanding his interests in banking. Why are workers up in arms about his recent move?

Henry Sy, owner of the ubiquitous SM malls, seeks to benefit most from the merger of Banco de Oro Universal Bank, which he owns, and Equitable PCI Bank (EPCIB). Two government financial institutions, the Social Security System (SSS) and Government Service Insurance System (GSIS), maintain a significant share in EPCIB.

Labor group Kilusang Mayo Uno (KMU or May First Movement) warned that the merger, hatched by Sy’s SM Group when it bought some 24.76 percent shares of EPCIB, would be detrimental to the government and private sector workers who are members of GSIS and SSS, respectively.

Confederation for Unity, Recognition and Advancement of Government Employees (Courage) head Ferdinand Gaite called the transaction an “ukay-ukay” (flea market) as SSS sold its EPCIB shares at P56 ($1.09, based on an exchange rate of P51.26 per US dollar) per share, lower than the prevailing market price of P65 ($1.27) per share.

KMU and Courage stressed that selling SSS shares at lower prices could affect the benefits given to members of SSS like retirement, education and health. They argued that “volatile investments” such as this does not ensure income for the government and that losses will be incurred at the expense of the workers and their dependents.

“Inauspicious”

While KMU supports a bill filed by Iloilo Rep Arthur Defensor that seeks to downscale investments by SSS, KMU Chair Elmer Labog said, “The culprits behind these unfavorable ventures should be investigated and held liable.”

Labog said that the EPCIB and BDO merger would put at risk the invested funds of at least 25 million members of SSS, and 1.5 million members of GSIS. SSS has a 29-percent stake in EPCIB while GSIS has a 12.4-percent stake.

At present, SSS and GSIS have five seats in the 15-person board of directors of EPCIB, while Sy’s SM Group has two seats. A significant chunk is also owned by the Romualdez family.

Volatile

Gaite said in the event that Sy’s bank would take over the EPCIB assets, the government could lose control of its assets due to unstable market forces.

GSIS President Winston Garcia has floated its EPCIB shares for private bidding. Reportedly, Garcia wants to buy Sy’s stake in EPICB and then sell it to an interested investor to profit at least P4 billion ($78.03 million).

“Floating the government funds in the market will not benefit the employees because there is no guarantee in the market…knowing such an unstable condition, the government could lose in this offering,” Gaite said.

KMU stressed the possibility of widespread retrenchment once the merger pushes through, given the capitalists’ “penchant for contractualization and unfair labor practices.”

The group noted that in 2003, BDO wanted to buy the P187.85 million ($3.66 million) shares of SSS in EPCIB at P43.50 ($0.85), but was prevented from doing so due to a case filed in the Supreme Court. Bulatlat

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