The government has abandoned its previous plan to privatize United Coconut Planters Bank (UCPB) and instead jacked up control over the state-run lender so it can assist farmers and help ensure food security amid the COVID-19 pandemic.
In a statement on Friday, the Department of Finance (DOF) said the government’s stake in UPCB was hiked to 97 percent from 75 percent previously through the conversion into special preferred shares of P12 billion in capital notes that the lender earlier issued to the state-run Philippine Deposit Insurance Corp. (PDIC).
To recall, the government had provided UPCB capital and income support as well as regulatory relief under the financial assistance package it extended in 2008 through the PDIC and the Bureau of the Treasury.
PDIC president Roberto B. Tan explained to the Inquirer last year that the original P20-billion financial assistance package had been amended, converting it into P12 billion of capital notes and P8 billion of purchase-of-assets without buyback.
“The capital notes are convertible to special preferred shares and the PDIC has exercised this option, effectively increasing the government’s shareholdings in UCPB to 97 percent,” Tan was quoted by the DOF as saying.
Pressed for details, Finance Secretary and PDIC Chair Carlos G. Dominguez III said the remaining 3 percent of UCPB was still being held by “various private sector individuals and entities.”
Asked why the government held on to UCPB, Dominguez said: “We expect the board of UCPB to consider reorienting their focus on serving the farmers and processors of coconut and other vegetable oil products, but balancing their portfolio with exposure to other industries and clients in the middle market.”
“The Duterte administration has followed the policy of strengthening the capital bases and rationalizing the structures of all government-owned and -controlled banks, namely Land Bank of the Philippines, Development Bank of the Philippines, Overseas Filipino Bank and UCPB, with the objective of improving their level of service and value for their stakeholders, the Filipino people. This latest move of the PDIC of converting the capital notes it held to more permanent special preferred shares in UCPB is totally in line with the above objective,” Dominguez said.
On top of the P20-billion PDIC assistance was P30 billion in income support through deposits from the Treasury.
The government ended its support to UCPB in 2017.
Last year, Dominguez said the government wanted to recover its capital and deposit investments in UCPB through “many other alternatives other than privatization.”
In 2015, the Privatization and Management Office “temporarily suspended” the planned sale of the government’s controlling stake in UCPB.