MANILA, Philippines - The sale of the government’s controlling stake in United Coconut Planters Bank (UCPB) is likely to happen in the first quarter of 2015, a ranking official of the Department of Finance said.
Finance Undersecretary Jose Emmanuel P. Reverente said the bidding for the government’s stake in UCPB is pushing through “early next year” to take advantage of the strong interest expressed by major local and foreign banks.
Reverente said foreign financial institutions are also welcome to join the bidding given the liberalization of the Philippine banking sector.
Foreign banks are now free to fully own a bank in the Philippines following the passage of a bill lifting foreign ownership restrictions.
The move is in line with the Aquino administration’s goal to attract more foreign investments into the country and is in preparation for greater economic integration with Asean member-countries come 2015.
Foreign banks were previously allowed to own only as much as 60 percent of Philippine banks, but that has now been increased to 100 percent.
The government’s stake in UCPB is currently held by the Presidential Commission on Good Government (PCGG), the agency tasked to run after ill-gotten wealth.
The PCGG took over the bank in 1986 following the ouster of then President Marcos. The sequestration was done to prevent the further deterioration of UCPB and to protect its depositors and prevent any systemic risks to the banking system.
The Supreme Court last year ruled with finality that the government owns the shares claimed by businessman Eduardo “Danding” Cojuangco Jr. in UCPB and that these should be used for the benefit of coconut farmers.
Preliminary work on the bank’s recapilization plan has been completed with the value set at P14 billion to P37 billion.
Among the big groups that have signified their intention to participate in the bidding include tobacco and airlines tycoon Lucio Tan’s Philippine National Bank (PNB), billionaire Henry Sy’s BDO Unibank, the Aboitiz family’s Union Bank of the Philippines, and East West Banking Corp of the Gotianuns.
UCPB last year secured shareholders approval to jack up its capitalization to P40 billion to give it financial muscle ahead of the implementation of the Basel 3 capital adequacy ratio framework, a set of global banking standards.
The recapitalization program is seen to ensure UCPB’s long-term competitiveness, viability and growth, meet BSP regulatory requirements under the Basel 3 framework and allow that bank to pay down its state obligations.
Proceeds from the sale of UCPB shares would go to a trust fund that would be put up for coconut farmers.