MANILA, Philippines — Moody’s Investors Service upgraded the credit rating of United Coconut Planters Bank (UCPB) to investment from speculative grade a few days after its merger with state-run Land Bank of the Philippines took effect.
The debt watcher awarded a Baa2 rating – a notch above minimum investment grade – from Moody’s last March 4, a few notches higher than the speculative rating of Ba3, following the completion of the legal merger with Landbank last March 1.
Landbank is the surviving entity absorbing all the assets and liabilities of UCPB, which has ceased to exist.
The credit rating agency said the outlook on UCPB’s long-term deposit rating is stable.
Moody’s said the ratings were placed on review for possible upgrade in August last year.
Subsequently, Moody’s would withdraw all of UCPB’s ratings.
UCPB’s assets stood at P347.4 billion as of end 2020, while the resources of Landbank amounted to P2.4 trillion.
“Moody’s estimates the combined entity will be the second-largest bank in the Philippines, with a market share in assets of approximately 15 percent as of the end of 2020,” the debt watcher said.
Landbank and UCPB said their respective board of directors, including stockholders, approved the terms and conditions laid out in the plan of merger and articles of merger. They also secured the required authorizations for the buyout to take place.
As a procedure, the merger was endorsed by the Governance Commission for GOCCs and was approved by the Monetary Board of the Bangko Sentral ng Pilipinas and state-run Philippine Deposit Insurance Corp.
The Securities and Exchange Commission, on the other hand, issued the certificate of approval for the plan of merger and articles of merger permitting the banks to push through with the transaction.
Landbank said banking services would go on as usual during the consummation of the merger, while UCPB branches would also remain operational to serve its former clients until the bank’s systems are transferred and its customers are migrated to Landbank.
As a result of the merger, assets held by Landbank will increase to nearly P3 trillion, cementing its position as the second largest bank in terms of assets.
The clients of Landbank and UCPB now have access to 667 branches and 2,722 ATMs nationwide.
President Duterte approved the merger of Landbank and UCPB in an effort to improve the delivery of financial services to the coconut industry and the agriculture sector.