FMIC to set up China desk, gears for global competition

MANILA, Philippines - The investment banking arm of the country’s largest lender, Metropolitan Bank and Trust Co., is looking for global allies and putting up a desk in China as it taps offshore clients and competes in the global market. First Metro Investment Corp. (FMIC) has identified three trends that will affect its operations in the next 10 years — globalization, the rise of China and India as global economic powers and the rising middle class in the Philippines. The latter, which will likely consist of business process outsourcing workers and Filipinos working abroad, have become the biggest driver of domestic consumption and the largest source of foreign exchange, company President Francisco C. Sebastian said Monday. "Investment banking is not a static but a very dynamic industry that evolves over time from the point of view of the general economic environment, the development of financial markets and competition," he told shareholders. With barriers to goods, capital and people going down, "local businesses like us will need to compete globally, [adapt] themselves to a global market and follow global business standards and practices to survive and thrive." Mr. Sebastian admitted that it is a challenge for FMIC to step up the delivery of globally competitive products and services and deal with clients and competitors abroad. Senior management, he added, is charting a company road map for the next 10 years. In an interview, Mr. Sebastian said FMIC would like to take advantage of the presence of parent company Metrobank in Shanghai, China. Metrobank also has foreign branches in Taiwan, Japan and the US. "Filipinos are going abroad. The Chinese are coming on board. The capital is flowing in our direction. Metrobank is the only Philippine bank in China. We are putting up a desk to service the requirements," he said. He said FMIC could help Chinese companies set up branches here and Filipino firms to expand in China. "They will need fund-raising, bank lines. We hope to address their needs." Mr. Sebastian noted that as China and India attains economic significance, their cheap exports balanced by their strong commodity imports are affecting the flow of goods, services and capital. "Capital is no longer a monopoly of Western countries. Sovereign wealth funds from Asia and the Middle East are making their mark in financial markets with hefty buyouts of Western assets," he pointed out. As traditional exporters’ margins disappear with high power rates and labor costs, mining would likely emerge as a major export industry, while infrastructure, property and BPOs will create new private and public business opportunities, he added. FMIC has three functions — investment banking, treasury operations and investment advisory. The company underwrites private equity and debt issues, syndicated loans, project financing, government securities and commercial paper dealerships. It also advises companies on their finances and investments. In 2007, FMIC posted its highest net income of P1.41 billion, a third higher than a year earlier as it participated in initial public offerings in the local stock market. Its treasury group, which sells government securities and corporate papers, contributed the biggest chunk to its income. Mr. Sebastian said last year’s record net income would be "hard to replicate" given the global economic slowdown. On Monday, FMIC shares closed unchanged at P40. - R.A.M. Rubio, BusinessWorld