The Duterte administration will stop supporting United Coconut Planters Bank (UCBP) in 2019 with a view of selling its majority stake in the bank, a Cabinet official said.
“We are supporting the bank at the moment,” Finance Secretary Carlos Dominguez 3rd told reporters, referring to capitalization requirements mandated by the Bangko Sentral ng Pilipinas.
Under the international Basel III accord, banks must meet specific minimum thresholds for so-called common equity tier 1 (CET1) capital and Tier 1 (T1) capital in addition to a capital adequacy ratio (CAR).
The BSP imposes a minimum CAR of 10 percent, a CET1 ratio of 6 percent and a Tier I capital ratio of 7.5 percent. A capital conservation buffer of 2.5 percent, to be made up of CET1 capital, was also introduced.
Dominguez said the UCPB capitalization program would expire at the end of 2018 and the government was not inclined to support the bank beyond that date.
“The capitalization program does not mandate anything. I told them we are not planning to extend our support … it must be either sold or not sold,” he said.
The Supreme Court in 2013 ruled that the government owned the majority of UCPB as shares had been acquired using money from a coconut levy charged to farmers.
The then-ruling Aquino administration announced plans to privatize the bank but this was held up in 2015 after the Supreme Court issued a restraining order on the disposition of assets acquired via the coco levy.
The government has a 73.9 percent stake in UCPB.