SSS to sell Union Bank stake only at best price

By Ted P. Torres
The Philippine Star 06/14/2006

The Social Security System (SSS) is open to the sale of its holdings in Union Bank of the Philippines (Union Bank) "if there is a serious offer," its top executive said yesterday.

SSS president and chief executive officer Corazon de la Paz said that like all of its major and profitable holdings in private firms, the state pension fund is always open to selling its stake if it would result in huge benefits to its members.

"It is a very good investment, and we will sell if there is an equally good offer," de la Paz said.

The SSS has an equity stake of 26.87 percent in Union Bank. The two other major stakeholders are the Aboitiz Group of Companies with 49.629 percent and Insular Life Assurance Co. Ltd., controlling 18.75 percent.

Last year, the bank’s net income registered at P2.7 billion from P2.2 billion in 2004.

Investors said Union Bank must be open to new investors for greater transparency, as well as opportunities for fresh capital. Ninety-five percent of the bank’s equity is already held by the three major stakeholders, leaving very little for new investors.

On the other hand, the government pension fund is looking for different forms of investments to strengthen its reserves as well as lengthen its actuarial life to meet the increasing demand of its members.

Total disbursements for sickness, maternity, disability, retirement, death and funeral benefits increased by 5.2 percent to P12.46 billion for the first three months of the year compared with P11.84 billion in 2005.

"The base of retirees and other beneficiaries is growing faster than our ability to expand the actuarial life of the fund," the SSS president said.

Actuarial studies show that the SSS will be able to extend its actuarial life by 12 years from 2015 to 2027. But strong collection performance and rise in its investment income may extend it further to 2031.

Earlier, the SSS wanted to sell its stake in Equitable PCI Bank, the country’s third biggest leader, to Banco de Oro Universal Bank. However, several quarters including legislators, questioned the deal, resulting in a civil case pending before the Supreme Court.

The Supreme Court ruled that as long as it has not not decided on the case, a "status quo" condition will remain in the case of the SSS stake in Equitable PCI Bank.

 

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