UCPB placed under GCG control pending stake sale

THE UNITED Coconut Planters Bank (UCPB) has been placed under the supervision of the Governance Commission for Government Owned or Controlled Corporations (GCG) pending its long overdue privatization.

In a statement issued on Monday, the GCG said this move would allow it to “safeguard” the state’s interests in UCPB.

While the bank is under its care, GCG also promised it would be protecting the interests of coco farmers.

“Until the privatization is implemented, UCPB would remain a GOCC that must comply with the corporate governance requirements of Republic Act 10149,” the GCG said, referring to the GOCC Governance Act of 2011.

In this regard, “the members of the bank’s governing board would be appointed by the President of the Philippines to the extent of the state’s ownership and its performance would be closely monitored and evaluated by the [GCG],” it said.

The GCG added UCPB would undergo a two-year transition period since it has long been operating as a private corporation.

“The transition period was also intended to allow for possible resolution of the TRO [temporary restraining order] before implementing major changes in the internal governance setup of UCPB,” the GCG said. The regulator was referring to the Supreme Court-issued order in June temporarily halting  the implementation of Executive Orders 179 and 180, which would have set into motion the privatization of shares in the bank that were earlier declared as public funds.

The Privatization and Management Office (PMO) was then already in the process of disposing the government’s UCPB stake, initially targeted for September 2015, through a privatization scheme that would also require the winning bidder to infuse fresh capital into the bank.

The deal also required the recapitalization of UCPB by at least P15 billion through subscription of up to 37.2 billion primary common shares. It also required the outright purchase of at least 1.106 billion common shares held by the government or 73.9 percent of the bank.

The floor price had been set at P1 per share, hence entailing a total investment of at least P16.1 billion.

The PMO had already received 12 letters of intent from local and foreign banks as well as private equity firms eyeing to buy UCPB, the country’s 12th biggest bank with about P260 billion in assets and over 200 branches.

Under the GCG’s supervision, however, UCPB would be covered by a moratorium on increases in employees’ salaries, allowances and incentives, among other benefits.

“Reorganization or streamlining of UCPB requires GCG approval, while its merger, abolition or privatization requires GCG recommendation and approval by the President,” it said.