Italian Treasury As A Model for Valuing RoSS
Over dinner this Sunday evening, conversation turned to the issue of RoSS as a public utility and infrastructure. One of my friends observed that if private sector were going derive value from charging for services, then why can't RoSS be viewed like the MWSS where 2 private operators won out in the bidding.
Going by the PDS official's own estimate of PhP500 million a year in fees, I could then think about a discount rate of 15% going out for 10 years of steady income. One can always argue about the financial model but one could argue that the privatization value of the business spun out of RoSS is in the order of PhP 1 billion in Net Present Value terms - - PhP 1 billion that the custodians should be willing to put up as a theoretical bid for the business.
Granted I've only been on this job for 3 months but I've had to surface on my own a lot of these issues. It would have helped all of us, for instance, if the business study had looked at the legal and regulatory issues of a bid-out situation for RoSS rather than already expounding on the merits of securities lending etc.
As the Italian experience shows, the privatization is the condition precedent for enabling the capital market benefits. As we stand right now, the issues of connectivity, etc., etc. puts the cart before the horse, I think.
posted by Nina at 10:49 PM
5 Comments:
after following the issues over the weekend, it does appear to me that these people in the FIE hold a great deal of power to be able to convince key government agencies to write rules to favor them. funny, since bpi (and presumably other banks) recommended RoSS as their 3rd party custodian, FIE again sought to change the playing field by removing RoSS as an option investors will have to safekeep their securities. but PhP500 million in profits per year is a good enough reason for the exercise. the FIE even volunteered that the business is worth that much.
it was an entertaining read. it is like reading a conspiracy theory. the only difference is, this story is very real and backed up by documents. i believe this is the first time that the internet has been used by a government official to expose the behind the scene moves of a SPECIAL INTEREST group in the country.
SENATORS AND CONGRESSMEN SHOULD STEP IN AND STOP THESE SPECIAL INTEREST GROUPS FROM DOING FURTHER HARM TO THE ECONOMY.
7:09 AM
it's a formula...
BAD SCRIPT + BAD ACTORS = BAD MOVIE
=)
10:22 AM
i would like to commend Treasurer Nina Lasala, for her courage to speak up the whole truth in this third party custodianship issue..unlike the past treasurers who already knew about this and yet, did nothing but kept their mouth shut...bravo...
3:53 PM
Never fear! The BTR manifesto has been published last Saturday in Today.
Let us fervently hope that what we sowed and reaped will not be grabeed by others.
I admire you.
5:42 PM
Let the word go forth from this site...
That reforms are always born of the noblest intentions and the most laudable objectives but the devil is often in the details and in the implementation.
That no person in his or her right mind would refuse reforms that would to himself or herself be beneficial in the same manner that no person in his or her right mind would accept changes that cannot properly be communicated as beneficial.
That those in charge of a reforms process should be aware of their commitmments as persons providing a cure for a fundamental illness - that their cures do no harm or that in the event that undesirable effects are inevitable, such effects are properly disclosed to all parties concerned.
That it is no person's intention to tacitly do harm to the investment process but it has become apparent that the ongoing failure of the persons implementing the reforms to properly disseminate information to all parties concerned and to ensure that every action along the way is copacetic for all concerned.
That decisions by persons in authority or in government are ones bearing responsibility and in all cases where the public interest is affected, in this case changes to the manner in which public investors hold their assets, the public always has the right to know.
That regardless of who it is that makes what decision, issues what order bears what authority, it is the right of person to peaceable demand clarification or petition for redress.
That there are presons in government precious few that are neither cowed by politics nor swayed by pressure but instead judicious in their administration of the affairs of state.
Nina Lasala may be derided in the media as the shortest serving treasurer in the history of the BTR. Yet in her short stay, she has defended with her name and reputation, the interest of the government's creditors and the general investing public that no reforms process be rammed through without proper thought and proper disclosure.
Nina, you have permitted yourself to neither be bamboozled by rhetoric nor bedazzled by b.s. Neither you nor your predecessors were given the respect of proper disclosure of the impact on your business of certain moves to reform the market. No one in his or her right mind would have acted on scant information.
But most of all, thank you for making people aware of the issues that may in the future affect their daily lives that they may agree or disagree accordingly and act appropriately that they not be blind sided by draconian implementation of policy.
7:03 PM
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