Sale of government stake in UCPB hangs

MANILA, Philippines - Talks over the sale of the state-controlled United Coconut Planters Bank (UCPB) remained deadlocked as the pricing, valuations and the beneficiary designations for the proceeds are still unresolved, a high-ranking official of the Department of Finance said.

Finance Undersecretary Jose Emmanuel P. Reverente said there are still major issues that need to be addressed before the government could proceed with the sale of its 72.2-percent stake in UCPB.

“While the government is determined to privatize UCPB, there remain however a number of concerns like how the proceeds would be distributed given the different claims of various farmer groups,” Reverente said.

 Reverente said tracing all the millions of coconut farmer beneficiaries could prove difficult since some of them had passed away.

Aside from this, coconut farmers have opposed the UCPB Board’s plan to declare P15.6 billion of an estimated P71 billion in coco levy funds as bank-owned and not owned by coconut farmers.

The Supreme Court ruled with finality that the government owns the shares of businessman Eduardo “Danding” Cojuangco Jr. in UCPB and that these should be used for the benefit of the coconut farmers because it was acquired with the coconut levy imposed on coconut farmers during the Marcos administration.

Coconut farmers said their recovered funds would help cover social benefits like pensions for their aging members as well as education scholarships and hospitalization and medical insurance.

There are about 20 million coconut farmers in the country.

Coconut farmers likewise proposed that distribution be made through appropriation in Congress or through the Philippine Coconut Authority.

UCPB, the country’s 12th largest bank in terms of total assets, has attracted the attention of both foreign and local investors including Philippine National Bank, BDO, Union Bank of the Philippines and East West Bank

Overseas lenders are now free to fully own banks in the Philippines following the signing of a law lifting restrictions on foreign ownership.

While relatively small, analysts note that UCPB is still a good acquisition target as it remains on the top 15 banks in the Philippines in terms of loans and deposits.

UCPB, which was placed under receivership due to tight liquidity problems in 2009, has improved its profitability over the years driven by higher growth in loans.

The government’s stake 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, protect its depositors and prevent any systemic risks to the banking system.

Preliminary work on the bank’s recapitalization plan has been completed with the value set at P14 billion to P37 billion.