Security Bank Corporation Clarification on News Article

March 5, 1998 PSE CIRCULAR FOR BROKERS NO. 297-98 SUBJECT : Security Bank Corporation Clarification on News Article Security Bank Corporation ("SECB") informed the Exchange, in a letter dated March 5, 1998, that contrary to statements in a news article entitled "Lakas Lambasts Erap Advisers" published in the March 5, 1998 issue of the Philippine Daily Inquirer, Mr. Manuel B. Zamora, Jr., identified as one of the three advisers of Vice-President Joseph Estrada accused of economic sabotage, is neither a stockholder nor an officer of SECB. Mr. Zamora sold all of his shareholdings in SECB on August 9, 1990 and ceased to be connected in any way with the Bank as of April 30, 1991. cdlex Attached is a copy of the article published in the Philippine Daily Inquirer. For your information. (SGD.) MA. ISABEL T. GARCIA Head, Listing and Disclosures Group Lakas lambasts Erap advisers BAP president retracts, clears Westmont, Allied banks BY MARTIN P. MARFIL, DORIS DUMLAO AND JERRY ESPLANADA THE EXCESSIVE leading rates of three commercial banks identified with the economic advisers of Vice President Joseph Estrada yesterday took a political color. Estrada's opponents yesterday picked up the issue and accused three of his advisers of economic sabotage. In a press conference, Speaker Jose de Venecia Jr. identified the three as Westmont Bank president Edgardo Espiritu, Allied Bank President Federico Pascual and Security Bank owner Manuel Zamora. "We should boycott these banks. This is equivalent to economic sabotage. They are preying on the agony of the Filipino people who are still suffering from the present economic crisis," said De Venecia, presidential candidate of the ruling Lakas-NUCD. He said the Bangko Sentral ng Pilipinas should impose stiff penalties on Espiritu, Pascual and Zamora for imposing high interest rates out of greed. Deogracias Vistan, president of the Bankers Association of the Philippines, disclosed on Tuesday that Security Bank was charging 32 percent while Allied Bank and Westmont Bank were charging 34 percent, five to six percentage points higher than the 27 percent ceiling agreed upon by the BAP. These rates prompted businessmen to stage protests in South Cotabato and Sultan Kudarat on Monday, paralyzing business and transport service. But Vistan yesterday retracted his statement that Westmont Bank and Allied Bank were charging lending rates way beyond the ceiling pegged under a gentleman's agreement within the association. cdpr Lakas members said Estrada's advisers "while technically-qualified, should have the moral fiber to do what is right and what is best for the country." "Before this crisis of high interest rates worsens in Mindanao, I hope Erap advises his economic advisers to stop lending at unconscionably high interest rates. Offering usurious lending rates is surely a form of economic sabotage," Rep. Jose Zubiri said in a statement. His partymates added that the allegation "does not augur well for the country if the Vice President, by some trick of fate, is lucky enough to become president." Grave danger The Partido Para sa Demokratikong Reporma said the welfare of the people would be in grave danger "if we go by Estrada's advisers." "Will we want somebody who is anti-people for indulging in excessive high lending rates to head the agency that controls our monetary system?" asked Reporma president and senatorial candidate Roberto S. Sebastian. Sebastian also said Estrada "apparently does not keep a very nice circle of friends even in the business community." Sebastian said it was an open secret in the banking sector that Espiritu had been coveting the position of Bangko Sentral governor during the Aquino administration, when he was still Philippine National Bank president. The Reporma official noted that Security Bank was owned by Ferdinand Marcos until 1986, after which the Zamoras emerged as the bank's owners. Manuel Zamora, brother of Rep. Ronaldo Zamora, was Marcos' alleged legal adviser. Allied Bank is owned by taipan Lucio Tan, who is currently under investigation for tax evasion involving billions of pesos, according to Sebastian. "Is there an advance compromise agreement in the works for Tan in exchange for support for Estrada's candidacy," added Sebastian, a former agriculture secretary of the Ramos administration. In a statement, Lakas-Kampi campaign spokesperson Annabelle Abaya said the opposition forged an "unholy alliance" with the three banks in a desperate attempt to fill up its campaign war chest. Abaya said Espiritu was principal organizer of the Feb. 17 affair of the opposition at a five-star hotel in which more than 30 members of the so-called Business Advisory Group (BAG) of Estrada were named. Undue poverty Abaya said the opposition was causing undue poverty to the people in Mindanao by dictating "usurious" and "unconscionable" interest rates of three local banks. LLjur Abaya said the banks' imposition of hefty interest rates was obviously triggered by the opposition as part of its fund-raising scheme. "It is no coincidence that these bank executives are also with Estrada's team. They are the opposition's tool to exact campaign money from of all sources our people." Abaya said the top executives decided to bare their involvement with Estrada's campaign only last month for fear of exposure of their activities. "Now their credibilities are at stake for associating themselves with the opposition," she said. Vistan admitted that there was "oversight" on his part to have issued those statements against the two banks without sufficiently hearing their side. He said the matter would have been "corrected" Wednesday night had there been time to contact the banks. "Allied and Westmont should not be included. I wrote to the two banks expressing our regrets for the oversight," he said. "I regret the error," he stressed in a letter sent to Westmont Bank. Disappointed Westmont Bank president Edgardo Espiritu said he was very disappointed that the BAP chief "went public with unverified information." "We only read about this in the papers. If they had taken the time to ask us, we would have given them the correct information," he said. In separate statements, Westmont Bank and Allied Bank denied having violated the agreement to keep their prime and non-prime lending rates within the 27-percent ceiling. The two banks said they had not been able to collect interest payments from their outstanding loans to the Koronadal businessman, whose accusations Vistan used as basis of his earlier statements. Security Bank, for its part, also issued a statement explaining about the past due loan accounts, but did not deny that it was charging beyond the agreed level. But in Malacaang, President Ramos confirmed that the three banks were offering excessive interest rates. cdpr "Governor Singson reported to me this morning that three banks were found to have overcharged interest rates. Number one is Westmont Bank and that is headed by Edgardo Espiritu, who is supposed to be the financial adviser of the (opposition) Laban ng Makabayang Masang Pilipino, at 34 percent," he told reporters in his weekly news conference at Malacaang. Mr. Ramos said "another bank at 34 percent also, Allied Bank, owned by you-know-who, and another bank at 32 percent when other banks are charging something like 28 percent." But he assured the public that interest rates would most likely be lowered shortly. He said "this is something in the realm of responsibility of the Bangko Sentral ng Pilipinas and the Bankers Association of the Philippines." Lower lending rates, he said, depends on the "cooperation between local bankers and the Bangko Sentral in the lowering of the so-called intermediation rates by as much as 2 to 3 percent." Low rates soon Singson said that by March 10 borrowers can expect "a low of 21 percent and a high of 25 percent." The BAP, Singson said, had given him their "commitment in writing." Interviewed at Malacaang, Singson said he and other members of the Monetary Board were studying proposals to put a ceiling on interest rates, now pegged at a high of 27 percent. "That will be decided by the seven-man board. It will take time, maybe a few weeks," Singson said. The board, he said, is also considering holding public hearings on the issue. Singson said "the debate now is whether or not to fix or put a ceiling on interest rates." In Koronadal, South Cotabato, businessmen yesterday warned of widespread protests that would lead to the paralysis of trade and commercial activities in Mindanao if their demand for lower interest rates is not given. LLphil Lawyer Augustus Velarde, spokesperson of the South Cotabato Integrated Businessmen Association, said business groups would meet to discuss the possibility of holding protest actions all over Mindanao. With a report from Nelson C . Bagaforo, PDI Mindanao Bureau .