Benefits of merger?

NOW THAT Mr Ken Gordon has identified himself as the person originally proposing the UTC-FCB merger, we expect that he would now proceed to tell the country exactly what are the “significant benefits” the two organisations stand to derive from his controversial proposal. Since Prime Minister Manning floated the idea more than a week ago, the touted merger has provoked a spontaneous, agitated and unanimous avalanche of disapproval from members of the public. Also, we have heard no independent and responsible voice from the financial sector expressing support for the proposal, far less explaining how such a merger could possibly benefit the two institutions.

Surprised, perhaps, by such widespread opposition, Mr Gordon, who also happens to be the FCB chairman, considers it unfortunate that so much misunderstanding has been generated by his proposal to the Prime Minister. The document he had submitted for the Government’s consideration and study indicated “significant benefits” that would flow to both UTC and FCB if they came together under a holding company, “while maintaining their separate identities and functions.” We believe that both Mr Gordon and the Prime Minister must now see the necessity of releasing to the public the contents of this document, since the alleged benefits the FCB chairman speaks about are neither clear nor apparent to anyone outside the Bank. Indeed, Mr Gordon’s statement on Friday seems to confuse rather than clarify the issue, since he lauds the performance of FCB which, he says, has grown into a strong financial institution, enjoying the highest rating among local banks. If that is true, then we say hats off to the FCB; but having achieved that pre-eminent status what then could be the bank’s need or possible advantage in merging with the Unit Trust? Is it simply to create the country’s most humongous financial entity?

On the other hand, the Unit Trust has also carved out for itself an outstanding record of success in the arena of mutual funds, winning the support, satisfaction and confidence of some 400,000 unit holders. As a unique financial organisation in the public sector, the UTC can be held up as an admirable example of local skill and expertise, even outperforming some of the leading mutual funds in the United States. Having virtually mastered the market, we are unable to see how any merger or linkage with a commercial bank can serve to strengthen the operations or enhance the performance or increase the opportunities for growth of the UTC. The Trust has done splendidly well on its own and, in our view, should be left completely alone to serve its unit holders and to pursue its own growth. Why does the FCB chairman want to write his own chapter into this success story? For whose benefit? Will he or the Prime Minister please tell the country? However, the fundamental and inescapable consideration for Mr Manning and his government in this issue must clearly be to level with the country and to give all the details of this proposal before any decision is made. If the PM is true to his government’s commitment to accountability, transparency and the principles of democracy, then he will let the country know what is behind this proposal and also be guided by the voice of the people and, particularly, the wishes of UTC’s 400,000 unit holders.