Merrill Lynch has announced that it has accepted an offer to sell its Philippine brokerage operation to its own local management team. When the buyout is complete, the brokerage will operate under the name Philippine Equity Partners Securities Inc.
Jojo Madrid, currently head of sales, and Jojo Gonzales, head of strategy and economics, have led the management buyout group, and will continue to conduct research and dealing in the Philippine securities market.
Merrill, who set up the brokerage in 1997, says it intends to use Philippine Equity Partners Securities as its exclusive broker for its trades on the Philippine Stock Exchange.
An official at Merrill said the decision was made because it made financial sense at this time. "Basically what happened is that several senior staff in the Philippines were bullish about the prospects of the brokerage and came to us with a good offer, which we decided to accept," he explains.
The decision could be seen as a change in Merrill's strategy, which pre-crisis was very much based on the British approach of building a local presence in each Asian market, to a more American philosophy, which advocates centralizing Asian operations, normally in Hong Kong or Singapore.
A recent decision by Merrill to reduce its research team in Malaysia, as well as rumors that it may sell off ML Phatra, its Thailand operation, suggest that the bank is either deciding to conduct its Asian activity from a regional headquarters, or that it may actually be scaling down its efforts in the region.
The official dismissed this notion however. "There are no fixed plans for what we are doing in Asia, and the decision to sell the Philippine operation is not something that we see as being a model for what we will do elsewhere," he says. "We are simply focusing on allocating resources in accordance with how the markets are changing and how the banking industry is changing."