State run Development Bank of the Philippines (DBP) has announced its looking to sell its 75% stake in the 17-kilometer Metro Rail Transit 3 (MRT 3). An estimated $400 Million sell off.
The company is trying to increase its annual net income over last year from P4 billion to P4.2 billion.
“It can be bigger if we can dispose of some big-ticket assets such as the MRT 3,” Francisco F. del Rosario Jr., DBP president and chief executive officer, said. “However, that would only be a one-time gain.”
He said the entire prospective amount could reach $679 million if the remaining government stake held by the Land Bank of the Philippines (LBP) is included.
“We all know that the major players are extremely interested in the government stake, that include the Metro Pacific Group of Manuel V. Pangilinan, the San Miguel Group led by Ramon S. Ang, and the Ayala Group (putting a government asset in the hands of the Philippines elite families).
DBP has turned over P4 billion to the government representing its dividend covering the 2010 and 2011 period. GFIs are required by law to turn over 50 percent of its annual earnings to the National Government in the form of dividends.
This has resulted in a lower retained earnings for the bank, which is the reason for the issuance of the debt paper. The additional capital is also required to ensure a capital adequacy ratio (CAR) of 17 percent.
“Money raised from the debt paper and the possible asset sale will feed our development lending program,” the DBP executive said.
The priority lending of DBP will be in infrastructure and logistics-related activities, social services, and environment.
Although I have heard nothing regarding the profit of the MRT service and if the sell off is justified just to meet an “annual profit” target.
Government money into private enterprise,how original just seems that the rich are going to stay rich when you leave them in charge of a nation.