Tuesday, August 05, 2008 Youth told to maintain financial integrity, practice transparency
ABOITIZ Equity Ventures (AEV) chief finance officer Stephen Paradies urged youth leaders to work with integrity and transparency in their present personal finances and in the finances of the companies they will soon work for.
He said that such qualities are important—especially for potential lenders, like banks (commercial or savings), and even non-bank financial institutions, such as insurance companies and pension funds—since they can be tapped for long-term funding.
“A reputation for integrity is built on history, particularly your credit history. It is developed over the years, based on your past behavior, your past dealings. A borrower has to pass this first hurdle before it can have any hope of being granted credit,” Paradies said during the Third Aboitiz Future Leaders Business Summit last Saturday.
He said that when Aboitiz and Co. goes to a bank to borrow money, they are usually able to borrow on a clean basis or without being required collateral.
“This is because of our good credit standing and history. We have been true to our commitments on all our loan obligations so the banks are comfortable about dealing with us,” explained Paradies.
Another instance was when SN Aboitiz Power, was able to secure a $380-million loan from a consortium of international and domestic financial institutions to pay its $530-million winning bid for the 360-megawatt Magat hydropower facility.
“Our treasury group collaborated with the banks, determined to complete the deal under terms and conditions that are favorable to us and yet acceptable to the lending institutions...The whole financing deal was so remarkable that it became the Power Deal of the Year,” he said.
He added that as a publicly listed company, Aboitiz acknowledges its responsibilities to various stakeholders and complies with financial reporting requirements based on approved accounting standards.
Paradies called on the youth participants to incorporate integrity and transparency in financial practices, such as financial discipline, financial planning, financial priorities, financial trust, perseverance and attention to details.
He said these could be applied at a personal level or as their future business grows bigger and more complex, requiring financing for working capital or for expansion projects, research and development, new product or service launching, or purchase of new equipment to increase overall efficiency.
He acknowledged that summit participants may not be old enough to realize the impact of a financial crisis, like the one that hit Asia in 1997, but he advised them to focus on what they are good at and make calculated risks.
“Integrity and transparency are qualities that are so sorely lacking in our country’s leadership today. As you build your own individual futures, please keep those two key words in mind always. We are counting on you,” Paradies told summit participants.
Meanwhile, Unionbank chairman and chief executive officer Justo Ortiz said he believes that there will be no repeat of the
Asian financial crisis since credit standards are now tighter.
“We now have (more strict) capital requirements. We can only expand our loan book to the extent that we have the capital to support market risk and operational risk, aside from credit risk. To some extent, the (banking) industry is very liquid. It’s a good thing to have because it looks into the future,” he said. (NRC)
