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Half the world’s banks too weak to survive a downturn — McKinsey

MORE THAN HALF of the world’s banks are too weak to survive a downturn, according to a survey from consultancy McKinsey & Co.

A majority of banks globally may not be economically viable because their returns on equity aren’t keeping pace with costs, McKinsey said in its annual review of the industry released Monday. It urged firms to take steps such as developing technology, farming out operations and bulking up through mergers ahead of a potential economic slowdown.

“We believe we’re in the late economic cycle and banks need to make bold moves now because they are not in great shape,” Kausik Rajgopal, a senior partner at McKinsey, said in an interview. “In the late cycle, nobody can afford to rest on their laurels.”

The decade since the global financial crisis has seen a wave of innovation in financial services, bringing new competitors from fintech start-ups to giants like Apple, Inc. and Alphabet, Inc.’s Google. Banks have pondered whether to compete with, partner with or acquire some of these newcomers. Some established firms have sought to rebrand as technology companies, in part to attract hard-to-get talent.

McKinsey, whose clients are some of the biggest corporations in the world, consults on topics ranging from strategy and technology to mergers & acquisitions (M&A), outsourcing and stock offerings. In its report, the firm said banks risk “becoming footnotes to history” as new entrants change consumer behavior. Most recent attempts by banks to boost efficiency have been “business-as-usual,” it said.

Banks allocate just 35% of their information-technology budgets to innovation, while fintechs spend more than 70%, McKinsey said. Combined with regulatory factors lowering the barrier to entry — like open banking and looser requirements for startups — the environment is increasingly conducive for newer firms to take share from banks.

The report points to Amazon.com, Inc. in the US and Ping An in China as examples of technology firms that are capturing financial-services customers. To make matters worse for the old guard, the new players tend to go after the business areas that create the highest returns at banks — credit cards, for example.

Lenders can cut costs and find funds for technology by outsourcing what McKinsey calls “non-differentiating activities,” including some trading and compliance functions. Banks “need to get much more comfortable with external partnerships and being able to leverage talent externally,” Mr. Rajgopal said.

Another way to free up money: get bigger. BB&T Corp. and SunTrust Banks, Inc. said as much when they announced their decision to combine earlier this year — the biggest US bank merger since the financial crisis. Mr. Rajgopal said he expects M&A to continue in the late cycle.

“Going forward, scale will likely matter even more as banks head into an arms race on technology,” the report says. — Bloomberg

Joanna Ampil reprises her role as Grizabella in Cats

CAT EARS, fur, and whiskers are the signature look in Andrew Lloyd Webber’s sung-through musical, Cats.

“The makeup artist will teach us one half of the makeup and we learn it by copying it on the other side,” musical theater actress Joanna Ampil explained about how cast members learn to transform into their alley cat characters. “It used to take me an hour and a half, but since I do eight shows a week, it became 20 minutes.”

After the opening number, she goes backstage for a quick change into the outcast and former “glamour cat” Grizabella, the role she dreamed of playing since she was 17.

The latest international tour of the Olivier and Tony award-winning musical — directed by Dane Quixall and presented by David Ian Productions — will make a stop in the Philippines, with performances at The Theater at Solaire in November. It is the musical’s second staging in Metro Manila since 2010, when Lea Salonga played Grizabella.

Ms. Ampil first played Grizabella in the United Kingdom and European tour from 2013 to 2014. The international theater veteran has also performed in Miss Saigon, Jesus Christ Superstar, Avenue Q, and Les Miserables in London.

She recalled seeing an advertisement on Twitter about auditions for the musical’s UK and European tour. “I was in Manila at that time, and I called my agent in London and I expressed my interest since I always wanted to play that role. I said I was willing to fly over [to the UK] to audition, and then I got the part,” Ms. Ampil told members of the press at the tour’s Manila launch on Oct. 2 at Solaire Resort and Casino in Pasay City.

Based from T.S. Elliot’s Old Possum’s Book of Practical Cats (1939), the story begins with the Jellicle cats meeting for the annual Jellicle Ball where the benevolent leader, Old Deuteronomy, chooses and announces which cat goes up to The Heaviside Layer to be reborn to a new Jellicle life.

“You get into this world of cats and you become oblivious to what is happening outside,” Ms. Ampil said. “A lot of people can relate to Grizabella [as] the downtrodden, aging character — even as humans, we can relate to that. Even if she’s playing a cat, a lot of us can relate to her story.”

One of the longest-running shows on the West End and on Broadway, the musical ran for 21 years at the New London Theatre where it premiered in 1981. It has been presented in 30 countries and translated into 15 languages.

Ms. Ampil said, “I’ve had my eye on this role since I was a teenager. It means a lot to me to bring it to my country.” — Michelle Anne P. Soliman

Cats the Musical runs from Nov. 6 to Dec. 1 at the Theater at Solaire. For more information, visit www.catsthemusical.com. Tickets are available at TicketWorld (891-9999, www.ticketworld.com.ph). Discounts are available for RCBC Bankard holders until Nov. 3.

Ghana gov’t terminates concession for ECG

MANILA ELECTRIC Co. (Meralco) said on Tuesday that the concession for the operation and maintenance of the assets of the Electricity Company of Ghana (ECG) has been terminated by the Ghanian government.

The concession, which was suspended by the government of Ghana effective July 31, had been terminated due to alleged “material breaches” in the provision of the demand guarantees by the Power Distribution Services Ghana Ltd. (PDS).

PDS is the special purpose vehicle created by the consortium that won the privatization bid where Meralco has a 30% minority stake.

“Based on the letter signed by Minister Ken Ofori-Atta of the Ministry of Finance of Ghana, the forensic audit by the auditors chosen by the Millenium Development Authority indicated that the purported Demand Guarantees were issued without due authorization and in excess of the mandate of Al Koot Insurance and Reinsurance, Qatari insurance firm and were therefore invalid,” Meralco told the stock exchange.

“The Demand Guarantees were key prerequisites and condition precedent for the turn-over of the assets and facilities of ECG to PDS. The same report also mentioned that there was no information available to forensic auditors to suggest that PDS committed fraud in relation to the Demand Guarantees,” it added.

Meralco said PDS had maintained it procured the demand guarantees in good faith and that it had no knowledge of any issue until the suspension of the concession.

Meralco’s disclosure comes months after it announced that the assets and operations of ECG had been handed over to the consortium in which it has participation.

PDS was created by the consortium between Meralco through Meridian Power Ventures Ltd., AEnergia SA, an Angolan company, and three Ghanaian firms, namely: TG Energy Solutions Ghana Ltd., Santa Power Ltd. and GTS Power Ltd.

The supposed handover came after the award to the PDS consortium as the electricity service provider in all of ECG’s operational areas in the southern distribution zone of Ghana, under a 20-year concession agreement approved by the government.

Meralco previously said the PDS consortium intends to invest $580 million as capital expenditure.

On Tuesday, shares in Meralco traded lower by 0.27% to close at P364 each.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls. — Victor V. Saulon

Indonesia central bank may cut key rate again

BANK INDONESIA may cut its benchmark rate again this week. — REUTERS

JAKARTA — A small majority of economists expect Bank Indonesia (BI) to cut its benchmark rate for the fourth straight month at its meeting this week to support the economy, a Reuters poll showed on Monday.

Eighteen of 30 analysts in the poll expected BI to trim the 7-day reverse repurchase rate by 25 basis points (bps) to 5.00% on Thursday, following three successive rate cuts totaling 75 bps. The others see BI keeping the rate at 5.25%.

“Recent data continue to point to sluggish economic activity, supporting the case for another rate cut,” ANZ’s economist Krystal Tan said, noting signs of weakness in consumption growth reflected by falling car and motorcycle sales.

Economic growth in 2019 is set to slow for the first time in four years hit by sluggish investment and weakening global growth from the protracted US-China trade war.

The central bank’s latest gross domestic product growth outlook for 2019 is 5.1%, compared with 5.2% last year, while 2020 growth is seen at the midpoint of 5.1%-5.5%.

BI officials have said their main focus is maintaining momentum in Southeast Asia’s largest economy. Last month, they complemented a rate cut with relaxation of lending rules and changes to monetary operations aimed at boosting growth.

A relatively stable rupiah and low inflation have allowed BI to roll back some of 2018’s 175-bp rate hikes, which was in response to capital outflows linked to US monetary tightening and Washington’s trade war with Beijing.

Ryan Kiryanto, a Bank Negara Indonesia economist who is among those predicting a hold this week, said the three rate cuts had not greatly affected demand for credit, and said November or December would be a more “proper timing for BI to once again lower the key rate to 5%.”

The median of 17 economists who gave longer-term forecasts expect the key rate to be brought down to 4.75% by the end of the first half of 2020.

HSBC, who sees a cut this week and another 25 bps in the first quarter of 2020, said in a research note that BI was likely to be more cautious for future rate reductions to keep Indonesia’s rate spread to US rates in line with comparable economies.

“The latest data suggest that the need for urgent easing is subsiding,” HSBC said, adding that investors’ focus will shift to efforts to lift growth by President Joko Widodo, whose second term began last Sunday.

Mr. Widodo is expected to unveil his cabinet later this week of ministers who would execute his economic policy, including a planned cut in corporate tax rates. — Reuters

Protesters target money managers at MoMA’s reopening party

THE LINE was long and impeccably dressed as befits the Museum of Modern Art’s opening night.

Women in gowns and men in tuxedos stretched around the block Friday to see the New York museum’s $450-million redesign. Also there were two police vans and about 100 protesters, chanting, screaming and dancing. They held signs — “Divest from Prisons” and “Blood on Your Walls” — and loud applause erupted when two of the group emerged from the museum with a banner saying “MoMA/Fink Make Sanctuary Not Prisons.”

The target that night was Larry Fink, the head of BlackRock Inc., and the activists ire was over the firm’s investment in “prison companies, the war machine and the destruction of the global environment.” Another group was there Monday to protest Steve Tananbaum’s ties to the Puerto Rico debt crisis. The groups, which include New York Communities for Change, want the founder of GoldenTree Asset Management removed from the museum’s board of trustees, according to Julio Lopez Varona, one of the organizers.

Seven people were arrested at Monday’s protest, according to the New York Post.

Elite New York organizations have long been subject to protests, but activists have increased their focus on museums this year and achieved some success. Warren Kanders resigned in July as vice-chairman of the Whitney Museum of American Art following months of demonstrations by activists opposed to his company’s sale of law enforcement and military supplies, including tear gas.

That’s one reason that Whitney’s art curator, Christopher Lew, was not shocked by the protests Friday night.

“We’ve seen our share,” Mr. Lew said, as he inched along toward MoMA’s entrance, steps ahead of Miami collector Martin Margulies.

For others the protest created more of an inconvenience. Wendi Deng Murdoch didn’t want to wait. She attempted to enter MoMa (Museum of Modern Art) from the side as a VIP, only to be told politely to join the line due to the protest. “In that case, we’ll have to come another time,” said Rupert Murdoch’s ex-wife, turning on her heels and departing.

The activists protesting Tananbaum are well versed in the language of finance, but are less interested in the nuances.

“While this board member has poured money into the arts, his hedge fund has invested heavily in a variety of Puerto Rican bonds, including bonds from Cofina, the government-owned corporation that issues Puerto Rican bonds to pay and refinance the public debt,” the organizers said in a statement.

GoldenTree didn’t create Puerto Rico’s debt crisis, but it may have profited when the island restructured its sales-tax bonds in February. Securities with the weakest lien, called junior Cofinas, received 56 cents on the dollar after those bonds traded at less than 10 cents on the dollar in December 2017. GoldenTree held $1 billion of those securities as of Nov. 26, 2018, according to court documents. That’s up from $110 million in August 2017, before Hurricane Maria slammed into the island and pushed down bond prices.

A representative for Tananbaum declined to comment on the MoMA protests. A spokeswoman for the museum didn’t reply to requests for comment.

BlackRock, meanwhile, points out that most of its equity assets are held in index funds, which “provide broadly diversified exposure to a market or sector and have democratized investing and broadened access to financial markets for millions of savers,” spokeswoman Melissa Garville said by e-mail. Bloomberg

Kenneth Rocher Villa is an author

By Carmen Aquino Sarmiento

IT IS SAID that for a man to have led a full life, he must: plant a tree, beget a son (there you go again, patriarchy!), and write a book. Kenneth Rocher Villa, age 24, was born with Morquio Disease, a rare incurable and degenerative disorder which attacks the spine. His case is far more severe than that featured in The Mighty (1998) starring Kieran Culkin as Kevin, the Morquio sufferer, who walks with braces and crutches. The movie was based on Freak the Mighty, a popular YA (Young Adult) novel by Rodman Philbrick. For Kenneth, the bone called the odontoid process, which should stick up between the first two vertebrae to support his head, did not develop. His spinal cord was gradually compressed, weakening his arms and legs. Kenneth never walked and has needed a respirator to breathe since he was four years old, when his skull came loose from his spine. The first two requisites for manhood are physically impossible for him, but amazingly he has achieved the third.

Practically bedridden for the last 21 years, Kenneth has never attended school. When he was younger, he tapped out old standards like “Somewhere Over the Rainbow,” “Amazing Grace,” and “When You Wish Upon a Star,” on an electronic keyboard. His musical taste then reflected that of his grandmother’s, Edna Villa, the family matriarch. Twenty-four years ago, a stranger had phoned to tell her that a newborn baby, said to have been fathered by Nanay Edna’s youngest son (an OFW in the Kingdom of Saudi Arabia) had been left for her at the Manggahan-Pasig Health Center. Right then, Nat King Cole began crooning “Nobody’s Child” over the radio. Nanay Edna believed the song was God’s way of telling her what she must do.

Just like that, she and her three younger single daughters: Jenny, Heddie, and Marigie, immediately went to the health center and took the baby boy home with them. And so Kenneth Rocher Villa, the foundling whose biological mother had rejected and abandoned him, ended up with three “mama-titas” and a doting lola besides. They have unconditionally devoted their lives and resources to caring for him 24/7. Kenneth’s alleged father distanced himself from the boy, but the Villa women never considered getting Kenneth’s DNA tested to find out if he was really related to them. They believed they were the instruments of Divine Providence meant to save the life of an unwanted sick child.

During his early years, Kenneth’s adoption into the Villa family divided the clan. They were not wealthy and had always relied on their labors. The Villa patriarch, a former OFW, was retired and ailing by then. Kenneth was always sickly and never sat up or crawled. The first four years of his life were a relentless round of visits to various doctors and specialists. Initially, he had been misdiagnosed with cerebral palsy. However, he amazed and delighted the family by speaking in complete sentences before his first birthday. His mama-titas taught him to read, and took him for physical therapy twice a week. He could barely grasp his toys, but that was when he discovered that he could make music on the electronic keyboard.

The older married Villa children urged Nanay Edna to return Kenneth to his wayward biological mother who was already with another partner. They had enough on their hands taking care of the second Villa son, Edgar, an invalid with congenital heart disease who had not been expected to survive past childhood. When Kenneth joined the Villa family, Edgar had reached his early 40s. He always had an oxygen tank. Nanay Edna knew from her experience with Edgar not to give up on a child.

When Kenneth was four years old, his neck collapsed. At the Philippine Children’s Medical Center, the doctors’ attempt to use a bone graft from his hip to stabilize Kenneth’s cervical spine failed. They pronounced him “a hopeless case.” The Villa Family was instructed to undergo bereavement counseling. But Nanay Edna and her three daughters did not give up. After four months in the pediatric intensive care unit, Kenneth went home. He and Edgar became roommates, both dependent on oxygen tanks, with Kenneth on a rented respirator. His mama-titas, none of them with medical training, had to learn to suction him round-the-clock. Edgar would change Kenneth’s oxygen tank. During the five years that Kenneth was flat on his back, unable to even turn his head, his mama-titas took such good care of him that he never even had a bedsore.

Sadly, Edgar passed away at 50, just months before Kenneth would have another surgery at the Philippine General Hospital (PGH) to stabilize his neck. The neuro-surgeon, Willy G. Lopez, performed pro bono the procedure to put new bone grafts, titanium plates and screws to stabilize Kenneth’s skull and spine. Dr. Lopez got his colleagues, such as the orthopedic surgeon Adrian Catbagan, rehabilitation medicine doctor Sharon Ignacio, and the pulmonology specialist Mike Javier to donate their professional services for free too. Months after his successful operation, Kenneth could sit propped up in a wheelchair — a big improvement from having been flat on his back, unable to lift or turn his neck for the previous four years. Now he could even ride in a car, opening up a whole new world. One of his first acts was to draw maps of the vicinity of the PGH and Luneta which he saw for the first time propped up in his wheelchair.

Kenneth reached adolescence, and the music keyboard was replaced with a PC keyboard, then a laptop and a touch screen tablet. Like other teens, he enjoyed videogames such as Warcraft, Final Fantasy, and Clash of Clans. Then he discovered J.K. Rowling’s Harry Potter, and his life changed forever. Soon he was devouring J.R.R. Tolkien, Rick Riordan, and Christopher Paolini. The rich lore of the Dragonlance Saga and Dungeons & Dragons, as well as Japanese anime fascinated him.

“Reading became my passion,” Kenneth relates. “Even when I played games, I found myself focusing more on the story.”

Becoming a writer himself did not immediately come to mind. However, the more he read, the more he wanted to recreate the joy he felt. Encouraging reviews met an early attempt at fanfiction. He set his sights higher, working every day, writing at least 1,000 words daily, getting feedback from friends, revising and rewriting till he was satisfied.

After nearly three years and five full drafts, he completed The Reaper of Iremia, the first part of his fantasy novel The Celestial Chronicles and self-published this on amazon.com/dp/B07TXR23th. The logline and synopsis read:

“Justice for the living. Vengeance for the dead. Judgement to the sinners. Calian seeks one thing: vengeance. After a murder incident during his childhood almost drove him insane, he has vowed to hunt down all criminals. However, one night he fails to stop one such murder, and he soon discovers that it is just the beginning of a more sinister plot. Reneia, Calian’s friend, holds a grudge. During her childhood, she witnessed the assassination of her mother and vowed to capture the culprit at all costs. Ten years later, she becomes an official member of Iremia’s City Guard when history repeats itself; her father is gravely injured in another assassination attempt, and the suspect is Calian. Two friends — one driven by revenge and the other by justice — both are seeking the truth. But as they delve deeper into uncovering the mystery behind all the deaths in the city, they discover that not everything is as it seems, and there is an evil plot behind the incidents; one that threatens all life in Iremia.”

Reviews have generally been positive. The Reaper of Iremia averages four stars on Good Reads. An Ohio-based blogger, Rachel Pope (rpbooklist.wordpress.com) even offered to edit his book for free when she found out that English is Kenneth’s second language, hence certain “unconventional word choices.” Corresponding with his readers has been a bonus to Kenneth’s writing life. Greatly heartened by their warm responses, he is now working on the second part of The Celestial Chronicles and hopes to publish this by early 2020. He foresees at least eight more parts to this saga. Kenneth Rocher Villa has come a long way and still has a long way to go.

The author was with the PAL Foundation which helped Kenneth to find the resources to have his life-saving second surgery, and she sourced his first wheelchair and got a respirator donated. She was also Kenneth’s godmother at his confirmation.

Ayala eyes perpetual bond issue

AYALA CORP. (AC) is looking at issuing dollar-denominated perpetual bonds, with a selection of banks to handle the issuance.

In a disclosure to the stock exchange yesterday, the listed conglomerate said it mandated several banks for a Regulation S offering of dollar-denominated fixed-for-life (non-deferrable) perpetual notes.

It tapped the Hong Kong Shanghai Banking Corporation Ltd. (HSBC) to be the sole global coordinator for the issuance. Acting as joint lead managers and joint bookrunners are BPI Capital Corp., Credit Suisse (Hong Kong) Ltd., HSBC, J.P. Morgan Securities plc. and UBS AG Singapore Branch.

The offer, it said, is “subject to market conditions.” AC’s wholly-owned subsidiary AYC Finance Ltd. will be the guarantor.

A Regulation S offer is often used for securities that are executed in countries outside United States. It can be used to issue either equity or debt securities to raise capital for a company.

In 2017, AC entered the dollar bond market through AYC Finance with the launching of a $400-million fixed-for-life senior perpetual notes. It had an annual coupon rate of 5.125% for life with no step-up.

A perpetual bond is a fixed-income security that has no maturity date, therefore investors in such bonds are unable to redeem their investments but is instead paid through a steady stream of interest payments.

AC is the country’s oldest conglomerate owning businesses such as Ayala Land, Inc.; Bank of the Philippine Islands; Globe Telecom, Inc.; Manila Water Co., Inc.; AC Energy and AC Industrial Technology Holdings, Inc.

In the first half of the year, the company’s attributable net income grew 135% to P37.84 billion, driven by the gains from its divestment in education and energy businesses.

AC shares gained P10.50 or 1.22% to close at P870.50 apiece on Tuesday. — Denise A. Valdez

Deutsche Bank eyes job cuts of at least 10% in rates unit

DEUTSCHE BANK AG is looking to cut jobs in the unit that trades interest-rate securities to reduce costs. — REUTERS

DEUTSCHE BANK AG is considering substantial cuts to the unit that trades interest-rate securities, a division that survived a large-scale pullback as part of the lender’s sweeping revamp in July.

Chief Executive Officer Christian Sewing has concluded that it’s possible to reduce enough of the associated technology costs to outweigh the loss in revenue, according to people briefed on the matter. The bank will likely cut a low double-digit percentage of jobs at the business, which employs several hundred staff, said one of the people, adding no final decision has been made. A cut of 10% would translate into fewer than 100 jobs at risk.

“We are committed to a robust and broad-based rates platform, and are investing in areas of our rates business where we see opportunities to grow our client franchise,” Deutsche Bank spokesman Charlie Olivier said by e-mail.

The bank is currently putting the finishing touches on a review of the unit, which has struggled with low profitability for some time, said the people, asking not to be identified discussing the private information. Findings could be presented at the bank’s investor day in December.

Sewing in early July presented a sweeping restructuring plan centered on pulling back from equities trading and cutting a fifth of the workforce. The lender said at the time that it wants to remain a “leading bank” in fixed-income trading, its traditional strength, but it soon became clear that adjustments were needed there, too.

RATES BUSINESS
The rates business, headed by Kemal Askar, falls into many different geographic regions — including the US — and includes a range of products — such as options or swaps. Pulling out of any one of them only makes sense if the bank can eliminate associated costs of information technology, the people said.

In rates trading, investors buy and sell products such as government bonds and derivatives to profit or protect themselves from macroeconomic developments that affect interest rates. It’s distinct from credit trading, where participants buy and sell debts and derivatives to wager on a company’s ability to repay loans.

“We are a significant player in rates, but rates is an area where we need to refashion the business model to make it more profitable and do so against the resources that we have there,” Chief Financial Officer James von Moltke said last month.

Deutsche Bank plans to maintain a significant operation in the rates business because it sees the unit as an important element of its product offering for companies, one person said. Interest rate swaps are a common risk management instrument for companies seeking to achieve long-term stability in their financing conditions.

The lender has previously tried to scale down various investment banking units, only to subsequently realize it was unable to cut tech spending and other costs as quickly as initially expected. The bank is currently also seeking to sell a portfolio of interest-rate derivatives.

“One of the key concerns we have with Deutsche Bank is that the reduction of exposure” in the investment bank “could continue to impair its franchise,” Berenberg analysts led by Eoin Mullany wrote in a note on Monday before the Bloomberg story. “We remain skeptical as to its ability to keep investment banking revenue flat given that it faces headwinds that are both structural and cyclical.”

The banking industry as a whole has seen the business of buying and selling interest rates decline. The global revenue pool shrank to $10.1 billion in the first six months of the year, down by 17% from the same period in 2018, according to data provider Coalition. That was the largest drop among the six asset classes included in trading fixed income and currencies. — Bloomberg

DoJ recommends filing of criminal charges vs KAPA

THE DEPARTMENT of Justice (DoJ) found probable cause to criminally charge Kapa-Community Ministry International, Inc. (KAPA) for operating an investment scam.

Corporate regulator Securities and Exchange Commission (SEC) said in a statement yesterday a Sept. 25 resolution by the DoJ saw violations by KAPA of the Securities and Regulation Code (SRC).

The violations were on Section 8 (8.1), which requires securities to be registered in the SEC to be sold; Section 26.1, which prohibits the use of schemes to defraud; and Section 28, which requires brokers and dealers to be registered with the SEC to buy and sell securities.

The resolution identified KAPA founder and president Joel A. Apolinario, trustee Margie A. Danao and corporate secretary Reyna L. Apolinario as among those that may be charged for violating the law. It also named Marisol M. Diaz, Adelfa Fernandico, Moises Mopia and Reniones Catubigan, whom it said were engaged in the illegal selling of securities by KAPA.

In a separate statement, DoJ Undersecretary Markk L. Perete said the scheme KAPA employed is a “classic Ponzi scheme considering the impossibly high yields of return promised to investors.”

“(The Panel) rejected respondents’ argument that such investments were in the nature of religious donations, pointing out that the promise of return negates the giver’s liberality that is the hallmark of every donation,” he added.

SEC Chairperson Emilio B. Aquino noted the indictment of KAPA and the people behind it “is an affirmation of our unwavering commitment to championing investors and tackling abuses in the corporate sector.”

The SEC filed a criminal complaint against KAPA with the DoJ in June, which trailed a history of its own investigations on the organization’s investment schemes. It first issued an advisory against KAPA in March 2017, until the issue grew bigger over the two years that followed, leading to a cease and desist order in February and a revocation of its certificate of incorporation in April.

“This should also serve as a stern warning against other groups engaging in unlawful investment-taking activities and other predatory practices to the detriment of the investing public,” Mr. Aquino added.

The SEC said KAPA operates by collecting investments of at least P10,000, which it guises as “donations,” in exchange for a 30% “blessing” or “love gift” every month, for life. This happens even as the investors have to do nothing but wait for the returns.

The SEC flagged this as an investment contract, as defined in the SRC, therefore a separate registration should have been obtained from the Commission to legalize the activity.

Violation of the SRC is subject to a penalty of a maximum P5-million fine or imprisonment of seven to 21 years, or both.

KAPA was sought for comment through its Facebook page on the DoJ resolution, but did not respond as of press time.

Last month, the SEC warned the public that KAPA is returning to operations as KAPA Worldwide Ministry Association. At the time, KAPA is alleged to have collected about P50 billion — based on its supposed 5 million members and the minimum investment of P10,000 per head. — Denise A. Valdez

Art & Culture (10/23/19)

MCAD open house

MCAD will hold a open house on Oct. 27, 10 a.m. to 2 p.m. It will be a day of art, engaging activities and giveaways for all ages. As part of the museum’s current exhibition, What Lies Within: Centre of the Centre, which features the works of Mel O’Callaghan (Australia), Laurent Grasso (France), Suzanne Treister (United Kingdom), and Pamela Rosenkranz (Switzerland), visitors can take part in themed challenges, memory games and scavenger hunts inspired by the artists’ works. The Museum of Contemporary Art and Design is at the De La Salle College of Saint Benilde, School of Design and Arts Campus, Dominga St., Malate, Manila.

Programs at the Met

AS part of the celebration of Museums and Galleries Month in October, the Metropolitan Museum of Manila presents a Special Guided Tour: Abstraction in the Met Collection on Oct. 26, 10:30 a.m. and 1 p.m. Museum admission (inclusive of the tour) is P100 for adults and students and P80 for senior citizens and PWDs. Slots for each of the tours is limited to 30 participants. Meanwhile, on the same day from 2-5 p.m., there will be an Introduction to Chinese Painting: Demonstration and Workshop with artist and teacher Arsenia Lim. It will begin with an introduction to the materials, followed by a demonstration of the artist’s process. Participants will then be guided in the creation of their paintings. The workshop is open to adults, with no prior painting experience required. The workshop fee is P1,000 (inclusive of museum admission and materials). Limited slots. The Met is at the Bangko Sentral ng Pilipinas Complex, Roxas Blvd., Malate, Manila. For information and reservations call 8708-7828 or e-mail info@metmuseum.ph.

PPO tribute to Berlioz

TO commemorate the 150th anniversary of the death of French composer Hector Berlioz, the Cultural Center of the Philippines (CCP), the Embassy of France to the Philippines, with Stores Specialists, Inc. present Berlioz and Friends on Oct. 25 at the Tanghalang Nicanor Abelardo (CCP Main Theater) at 8 p.m. Widely regarded as the inventor of the modern orchestra, Hector Berlioz gained a reputation as an innovative composer whose unconventional body of work and exuberance made him a hero of romanticism in France. He was a close contemporary of Franz Liszt, who transcribed Berlioz’ orchestral works for the piano, and of Richard Wagner, who found inspiration in Berlioz’ works for his own compositions. French conductor Michaël Cousteau will take the baton for a one-time concert with the Philippine Philharmonic Orchestra, featuring soloist Rey Casey Concepcion on the viola. The program includes Berlioz’ Harold in Italy, op. 16 and Romeo and Juliet: Love Scene, as well as Wagner’s Tristan and Isolde: Prelude and Liebestod and Lizst’s Les Preludes. While in Manila, Mr. Cousteau will also conduct a musical lecture on the life and works of Hector Berlioz entitled “Ma vie est un roman qui m’intéresse beaucoup” (“My Life is a Novel that Fascinates Me”) at the Alliance Française de Manille in Makati on Oct. 24 as part of Les Jeudis culturels (Cultural Thursdays). This event is free and open to the public. To register, send an e-mail to lesjeudisculturels@gmail.com. Tickets to the CCP concert range in price from P400 to P1,500, and are available through the CCP Box Office at 8832-3704 or via TicketWorld at 891-9999 or www.ticketworld.com.ph. For more information about the concert visit www.ccp.gov.ph or contact the CCP at ccpsalesandpromo@gmail.com.

Arcamo and Tabije at Kaida

KAIDA CONTEMPORARY presents Artificial Staging by Mark Arcamo, and Beast Mode by Angelo Tabije. Both exhibits are on view until Nov. 4. In Artificial Staging, Arcamo examines the influence technology holds over our daily lives. In Beast Mode, Angelo Tabije transforms motorcycles into wild beasts. Kaida Contemporary is located at 45 Scout Madriñan St., South Triangle, Quezon City.

Casa de Memoria auction and preview

AN intricate filigreed Edwardian brooch at the Casa de Memoria auction

LIVING FOR THE PRESENT, Auction 18, is Casa de Memoria’s theme for its holiday auction set for Nov. 9. The preview begins on Oct. 24, until Nov. 8 at Palacio de Memoria. The collection will feature a diverse array of collectibles with over 220 lots on preview. The yuletide sale includes intricate Edwardian filigree jewelry (Lot 180), a Spanish bargueño (desk, Lot 67) and an assortment of dinnerware. “The extensive offering for the season is perfect for those of you who are looking for that special gift for oneself, or for something unique. This is our first Christmas at the Palacio, and we are working to create a full pre-war experience as well as a series of activities that come with our Holiday auction,” Camille Lhuillier, General Manager, was quoted as saying in a press release. For details, visit www.casadememoria.com, e-mail hello@casadememoria.com, or call (02) 253-3994.

Normalizing ECB policy must wait — Rehn

EUROPEAN Central Bank (ECB) officials must bear in mind their previous premature interest-rate hikes and the market turmoil around the US Federal Reserve’s tapering of bond purchases when they eventually start to tighten monetary policy, Bank of Finland Governor Olli Rehn warned.

“The core inflation rate remains low and clearly below the ECB’s price-stability target,” Mr. Rehn wrote in a book published in Helsinki on Monday. “Normalizing monetary policy awaits its turn, even though it would be important to increase the room for maneuver in monetary policy before the next recession.”

Mr. Rehn’s argument refers back to two rate hikes in 2011 under the then-president of the ECB, Jean-Claude Trichet, just before the euro zone tipped into a debt crisis and recession. The increases were immediately unwound at the end of the year by his successor, Mario Draghi. The Fed sent shockwaves through global markets two years later when then-Chair Ben Bernanke said bond purchases may be gradually phased out.

The Finnish governor was an early backer of monetary stimulus this year to overcome a euro-area slowdown driven by uncertainties over the US-China trade war and Brexit. That stance highlighted his transition from a politician who earned a reputation for advocating austerity — he spent much of the region’s crisis years the European Union commissioner for economic and monetary affairs.

The ECB ultimately agreed a rate cut and the resumption of asset purchases last month in a decision which split the Governing Council. It pledged not to end quantitative easing and start raising rates until inflation is solidly entrenched.

Mr. Draghi holds his final policy meeting this week before handing over to Christine Lagarde.

Both have insisted that governments also need to step up with fiscal stimulus to revive growth and inflation.

FISCAL RULES
Mr. Rehn’s book largely addresses the euro zone’s failures during the debt crisis, arguing that politicians should have moved quickly to stem contagion and protect more risk-prone countries. The next step should have been to reinforce bank balance sheets and capital buffers, and then to push through a controlled restructuring of Greek debt.

His recommendations for the future include a focus on financial stability, including completing the banking union; a large joint fiscal capacity and lender of last resort; broader macroprudential tools to tackle shadow banking and pay-day loan companies; more-credible fiscal rules; and stronger coordination of fiscal policies.

“Europeans deserve better decisions than we were able to take during the euro crisis,” Mr. Rehn said in the book. “But first they need to wake up to see why euro-zone reform is important and how it should be done.” — Bloomberg

How PSEi member stocks performed — October 22, 2019

Here’s a quick glance at how PSEi stocks fared on Tuesday, October 22, 2019.