The merger of state-run lenders Land Bank of the Philippines (Landbank) and United Coconut Planters Bank (UCPB) will be completed early in 2022, upon approval by regulators, Landbank president and chief executive Cecilia Borromeo said on Thursday.
The merged Landbank and UCPB will become the Philippines’ second biggest bank with about P2.7 trillion in combined assets, next only to BDO Unibank.
While UCPB has not yet been legally merged with Landbank, the former was now the latter’s subsidiary, Borromeo said in a text message.
“We are currently working to get all necessary regulatory approvals. We expect the merger to be implemented during the first quarter of 2022,” Borromeo said.
Borromeo would not say which regulators had yet to green-light Landbank and UCPB’s merger.
To recall, President Duterte in June issued Executive Order No. 142, which set into motion the two government financial institutions’ merger, with Landbank as the surviving entity.
In a message to the clients and creditors of both Landbank and UCPB on Thursday, Borromeo assured them of a “smooth” merger process.
“Rest assured that your deposits will remain intact and secured, and that your bank transactions will be unhampered and uninterrupted. We shall also ensure that the rights of all depositors and clients are upheld and protected,” Borromeo said.
Borromeo said the merger will result in a “stronger, more resilient and unified banking institution,” which will also promote financial inclusion, especially among still unbanked and underserved Filipinos.
Borromeo said Landbank was “more than capable of absorbing the financial impact of its merger with UCPB.”
“The impact on its profitability, liquidity and solvency ratios will be manageable, and its performance ratios will remain comfortably above the standards set by the Bangko Sentral ng Pilipinas (BSP),” Borromeo said.
According to industry sources, the government had moved to merge the two banks as UCPB’s capital adequacy ratio (CAR) had been set too fall below the BSP’s mandatory level.
Had it not been for the state-run Philippine Deposit Insurance Corp.’s capital notes which saved UCPB in the past, the bank would have been noncompliant with the CAR requirement, sources said.