PSE targets foreign banks for listing

The Philippine Stock Exchange (PSE) is targeting foreign banks to list on the local bourse in line with ongoing efforts to boost liquidity of the equities market and lure more initial public offerings (IPOs).

PSE president Francis Lim said he has proposed to the Bangko Sentral ng Pilipinas (BSP) to jointly draft a memorandum of agreement (MOA) that will encourage foreign banks operating here to list on the exchange.

"I have spoken with the BSP Governor and I was thinking maybe we could draft an MOA to lay the framework under which foreign banks can or should list," Lim said.

Lim said the bank liberalization law of 1994 could be used as the basis for requiring foreign banks to list on the exchange.

Among the foreign banks operating in the Philippines include the Hongkong and Shanghai Banking Corp. Ltd., Citibank, Deutsche Bank AG, and Standard Chartered Bank.

The PSE is stepping up efforts to encourage more companies to list in line with efforts to further spur the growth of the equities market.

The exchange is bent on seeing the listing of power firms, telecommunications firms and entities registered with the Board of Investments.

The oil deregulation law requires oil firms to offer at least 10 percent of their outstanding shares to the public three years from the effectivity of the law or in February 2001.

Among the oil firms operating in the country, only Petron Corp. made its debut at the PSE with the listing of 20 percent of its outstanding capital stock in 1994.

Once dubbed as a get-rich-quick investment option, an IPO is a means of raising funds for expansion and capital, employed by companies as a cheaper alternative to the more expensive debt instruments such as bonds and bank loans.

An IPO is done by selling a portion of the company’s shares of stock at a price based on its book value or on its projected earnings for the year. These shares are then listed with the PSE so that stockholders and investors may trade the issue.

President Arroyo herself underscored the need for the private sector to come up with its program to improve the stock market now that the government has delivered the necessary legislations on documentary stamp tax and securitization.