Bancommerce gets okay of Urban Bank, UII shareholders

The Bank of Commerce’s rehabilitation proposal for the closed Urban Bank got the green light at yesterday’s special stockholders meeting of Urban Bank and Urbancorp Investment, Inc.

In a presentation to the shareholders, Bancommerce reiterated its plan to service all deposit liabilities and claims of creditors of Urban Bank and UII within a three-year period.

The payout scheme involves an initial payment of P500,000 net of previous payments and matured loans followed by 30 percent at the end of the first year, 30 percent at the end of the second year and 40 percent at the end of the third year. Bancommerce will pay interest equivalent to the average 91-day T-bill less four percent for peso deposits and SIBOR less three percent for dollar deposits at the end of each quarter.

As an additional incentive for the depositors, ordinary creditors and preferred shareholders of Urban Bank and UII, Bancommerce will reimburse them for up to P1 billion in "foregone interest" from the proceeds of an asset pool composed of selected real estate assets and non-performing assets of Urban over the same three year period.

Further, Bancommerce disclosed that no payment in whatever form shall be made to UBI and UTI stockholders until all amounts due to depositors, ordinary creditors, preferred stockholders and the Philippine Deposit Insurance Corp. as well as all obligations incurred by Bancommerce from the Bangko Sentral ng Pilipinas and PDIC relative to the rehab of Urban shall have been paid in full.

After securing the Urban Bank and UII shareholders’ approval, Bancommerce presented other conditions precedent which will ensure Urban’s reopening at yesterday’s meeting. These include the actual infusion of P600 million by SSS as additional equity, the final agreement with Meralco, Petron and San Miguel for the conversion of a combined P750 million of deposits into Bancommerce preferred shares, and at least 90 percent of all Urban depositors and preferred shareholders’ written conformity to the rehab plan.

Bancommerce will then await the endorsement of the PDIC for the final approval of the Monetary Board of BSP. Also expected to give their blessing to the merger is the Securities and Exchange Commission. All these approvals of the regulatory bodies will pave the way for Urban’s reopening that will likely happen in mid-January 2001.