Top banks close in as UCPB auction draws near

The government may bid out its controlling stake in United Coconut Planters Bank by 2015 as it finalizes the bidding terms for the lender.

Already, the impending auction has drawn the interest of some of the largest financial institutions here and abroad, a top government executive said.

Andres Bautista, chair of the Presidential Commission on Good Government, told the Inquirer Friday that preliminary work on UCPB’s recapitalization exercise had been completed, with financial advisor Standard Chartered pegging the amount between P14 billion and P37 billion.

The PCGG sequestered UCPB following the removal of strongman Ferdinand Marcos in 1986. It is now waiting for an executive order from President Aquino on the direction moving forward, Bautista said.

The Supreme Court in 2013 ruled with finality that the Philippine government owned the UCPB shares claimed by businessman Eduardo “Danding” Cojuangco Jr.

“The bidding is going forward,” Bautista said, adding that the sale of the bank would likely take place next year. Originally, the government was supposed to sell its stake in the bank this year.

“It will be difficult if we don’t do it by 2015,” Bautista added, citing how the deal could be tied up with upcoming election season in 2016.

The recapitalization effort, which will be included in the bidding guidelines, has been undertaken to help UCPB comply with the requirements set under the Basel 3 framework.

Bautista added that the bank’s insurance units, like United Coconut Planters Life Assurance Corp., or Cocolife, would also be privatized although this was not an immediate priority.

“No rush as they are financially stable,” Bautista said.

Cocolife in 2013 posted a 50-percent increase in revenue to P4.9 billion while net income rose by 43 percent to P466.1 million, PCGG said in its 2013 annual report.

UCPB last year saw revenue hit P9.1 billion, up 27 percent, as it increased its deposit base, as well as its consumer and corporate loan portfolios.

It said profit during the period was down 7 percent to P3.4 billion, on lower interest rates and higher cost of funds, the annual report showed.

Previous reports showed that several of the country’s biggest banks would consider bidding for UCPB once it is put on the auction block. The institutions include Henry Sy’s BDO Unibank Inc. and Lucio Tan’s Philippine National Bank.

Other interested groups were the Aboitiz clan’s Union Bank of the Philippines, the Gotianun-led East West Bank, and Philippine Bank of Communications, recently acquired by businessman Lucio Co.