The government’s P30-billion infusion into the United Coconut Planters Bank (UCPB) is not a dole-out and is allowed because the bank is already a government bank, Finance Undersecretary and National Treasurer Roberto Tan said yesterday.
He said the government is expected to make the deposit within 120 days from the signing of the memorandum of agreement (MOA) between the government and UCPB last July 25.
Aside from the Department of Finance, the Philippine Deposit Insurance Corp. (PDIC) and the central bank also signed the agreement which provides for a P25- billion to P30-billion cash infusion for UCPB as part of a 10-year rehabilitation program.
“It cannot be just the PDIC (that will help UCPB) because they do not have enough resources,” Tan told reporters yesterday.
Tan said the National Government will use part of the amount it has deposited with the central bank and transfer these deposits to UCPB.
“We deposited the funds to the central bank when (UPCB) was being rehabilitated,” he explained.
UCPB will then invest the funds in government securities. The earnings of these investments would be used by UCPB for its financial needs including meeting capital requirements.
Moody’s Investors Service, for its part, earlier said that the infusion of capital into UCPB may help in propping up the sequestered bank’s finances, but more capital is needed to boost its credit ratings.
The bank was at the center of an ownership dispute between businessman Eduardo Cojuangco, former crony of the late dictator Ferdinand Marcos and the country’s coconut farmers.
The Presidential Commission on Good Government (PCGG) sequestered the bank after Marcos was ousted in 1986.