The Inter-Agency Privatization Council has approved the sale of a majority stake in United Coconut Planters Bank (UCPB) as well as the lender’s recapitalization to recover the public investments made in the ailing bank.
Finance Undersecretary Gil S. Beltran told reporters Tuesday night after the council’s meeting that the Privatization and Management Office (PMO) aimed to dispose the government-sequestered shares in the lender by September. “Starting today, the privatization of UCPB will be set into motion,” he said, with the PMO designated as the disposition entity.
Beltran, who is the acting chair of the Privatization Council, said the government would sell its 73.9-percent share in the lender while requiring a minimum bid that would include the recapitalization of UCPB by at least P15 billion.
The recapitalization would allow the government to recover the investments earlier made by the state-owned Philippine Deposit Insurance Corp. (PDIC) in UCPB, Beltran noted. “It’s a different kind of privatization.”
The sale of the government’s controlling stake in UCPB has been facilitated by Executive Order (EO) No. 179 issued by President Aquino last March, alongside an earlier approval made by the Governance Commission for Government-Owned and Controlled Corporations as well as the Supreme Court’s entry of judgment on the case involving San Miguel Corp. shares granted last December.
According to the Department of Finance (DOF), the PMO “shall soon request for submissions of expression of interest from prospective investors,” adding that the sale of UCPB “will be open to eligible domestic and foreign entities with proven track record in banking.”
In a statement Wednesday, UCPB said the sale of the government’s majority stake in the bank would facilitate “further unfettered growth.”
“The impact of the planned recapitalization of UCPB is nothing but favorable because it will give UCPB added resources to expand and ultimately revitalize and strengthen UCPB’s overall competitive position,” said Jeronimo U. Kilayko, the bank’s president and chief executive.
Kilayko claimed that “there are quite a number of financial institutions that have expressed interest in [UCPB]’s recapitalization.”
“The keen interest in the bank from a number of potential investors is recognition of our strength and value, a reflection of how competitive we are perceived in the industry and an acknowledgment of our commitment to the markets we serve,” Kilayko said.
The UCPB official said their clients and customers would benefit as they “can expect an even better, well-capitalized and revitalized bank to continue serving them.”
“UCPB has had its fair share of challenges over the years, but in spite of this, the bank has grown exponentially, now with 188 branches nationwide, despite never having the chance to increase capitalization since its sequestration in 1986,” it said.
For Finance Secretary Cesar V. Purisima, recapitalizing UCPB was a big step forward in implementing EO 179 as part of the President’s leadership on the longstanding issue on the coconut levy fund.
“UCPB’s successful recapitalization is integral in protecting the bank’s depositors and in strengthening our financial system. More importantly, it also enables the government to get the best value for the coconut fund set aside for our coconut farmers,” Purisima added.