To­day's Ed­i­to­r­i­al

Nei­ther the pre­vi­ous ad­min­is­tra­tion nor this one has made any ef­fort to sell ei­ther Re­pub­lic Bank or Methanol Hold­ings-al­though this is specif­i­cal­ly spelt out in the MoU and en­forced in the Share­hold­ers' Agree­ment that the Gov­ern­ment signed with CL Fi­nan­cial in June 2009. At yes­ter­day's trad­ing on the lo­cal stock mar­ket, the 83.7 mil­lion Re­pub­lic Bank shares held by CL Fi­nan­cial en­ti­ties was worth $6.7 bil­lion.

For­eign an­a­lysts who have looked at this sit­u­a­tion have con­clud­ed that a "strate­gic" sale of a con­trol­ling stake in Re­pub­lic Bank (CL Fi­nan­cial cur­rent­ly con­trols 52.3 per cent of the bank) would al­low the sell­ers "to cap­i­talise on a con­trol pre­mi­um from po­ten­tial buy­ers." The book val­ue of 56.5 per cent of Methanol Hold­ings held by Cli­co was placed at $4.37 bil­lion in No­vem­ber 2009-and this was be­fore the com­mis­sion­ing of the sev­en-plant AUM com­plex or the sharp es­ca­la­tion in the world mar­ket price of methanol. Ac­cord­ing to the MoU, the pro­ceeds from the sale of the CL Fi­nan­cial as­sets in Re­pub­lic Bank, Methanol Hold­ings, CMMB and "all and any of their oth­er as­sets" was meant to have been "ap­plied to sat­is­fy the Statu­to­ry Fund re­quire­ments for Cli­co and BA un­der the In­sur­ance Act, 1980 and the bal­anc­ing of the third-par­ty as­sets and li­a­bil­i­ties port­fo­lio of CIB."

This ap­proach of sell­ing the CL Fi­nan­cial as­sets and re­turn­ing the pro­ceeds to the statu­to­ry funds of Cli­co and BA has found favour with nei­ther the cur­rent nor the pre­vi­ous ad­min­is­tra­tion. The cur­rent ad­min­is­tra­tion has put for­ward a pro­pos­al to pay off those Cli­co and BA pol­i­cy­hold­ers with in­vest­ments of more than $75,000 with ze­ro-coupon bonds for 20 years. Gov­ern­ment spokes­men have said that the arrange­ments to pay the pol­i­cy­hold­ers will be in place by Car­ni­val. At that time, it is as­sumed that the Gov­ern­ment will em­bark on a pub­lic re­la­tions pro­gramme aimed at ex­plain­ing the pros and cons of its pro­pos­al. When it does, we rec­om­mend that some time be tak­en to ex­plain why the pro­pos­al out­lined in the MoU, which was sanc­ti­fied in the Share­hold­ers' Agree­ment, was found to be an in­ad­e­quate so­lu­tion to what has be­come a pro­tract­ed and cost­ly prob­lem.