GSIS won’t sell stake in Equitable yet

The Government Service Insurance System (GSIS) will not sell its shares in Equitable PCI Bank, hedging on the expected increase in share value if the Social Security System (SSS) succeeds at selling its holdings.

GSIS president and general manager Winston Garcia told reporters yesterday that should SSS succeed at liquidating its shares, this would augur well for the bank by ushering in a new management.

The Henry Sy-owned Banco de Oro has been trying to consummate the sale of the SSS stake in EPCIB but the transaction is being held back by the Department of Justice (DOJ) which has yet to issue a ruling on whether the sale could proceed.

Regardless of which group ends up taking over of Equitable PCI Bank, however, Garcia said the GSIS would benefit more by waiting in the wings until the dust clears and a new management group takes over the bank.

"When another group takes over and starts managing this bank differently, we expect the value of its shares to go up, then our investment position will be much improved," Garcia said.

He said the current management had "lost trust" due to its handling of Sy’s attempt to appoint his representatives in the Equi-PCI board.

Garcia said there was no immediate need for the GSIS to liquefy its investments in Equi-PCI bank as the pension fund’s net revenues increased from P29 billion in 2002 to P36 billion in 2003.

This year, Garcia said the GSIS expects to generate at least P40 billion and about P24 billion of this would come from income from the fund’s investments. The rest will come from premium payments of the fund’s 1.4 million members.

According to Reynaldo Palmieri, GSIS chief operating officer, the fund has also managed to reduce its actuarial deficit to P4 billion last year and to zero this year for the first time in the fund’s history.

"By 2005, it will be possible for us to generate our first ever actuarial surplus," Palmieri said.

GSIS, like the SSS, is taking losses on its holdings in Equitable PCI Bank but analysts said it had a deeper pocket and could hold on to the shares longer.

The GSIS had earlier announced that it wouldn’t settle for anything less than 90 percent per share on its 10-percent stake in the bank. Garcia said however that price was not the only consideration.

"If ever such an offer comes up, we will look at the terms of the entire transaction," Garcia said. "Certainly, we are not ruling out such a transaction."

Both the GSIS and the SSS are the key players in the impending merger between Equitable PCI Bank and the Henry SY-owned Banco de Oro.