The Philippine Privatization Council has approved the proposed auction of the controlling stake held by the government in United Coconut Planters Bank (UCPB) by September, the Department of Finance (DOF) announced on Wednesday.
The sale of the 73.9 percent stake held by the government in UCPB involves the right to recapitalize the bank, which was among the assets sequestered by the state after the collapse of the Marcos regime in 1986.
Apart from the bid amount, the recapitalization will require provisions of not less than P15 billion.
The Privatization and Management Office, which will handle the asset disposition, will soon request expressions of interest from prospective investors. The auction will be open to eligible domestic and foreign entities with proven track records in banking, the council said.
The recapitalization of the government-sequestered bank is in compliance with President Benigno Aquino’s order (EO 179) earlier to conduct “an inventory, transfer, reconveyance, and disposition of coco levy assets, and the transfer of the proceeds for the use and exclusive benefit of coconut farmers and the development of the coconut industry,” the DOF statement said.
The bank’s ability to raise capital had been deterred by a pending case on the ownership of the bank, the interagency Privatization Council said.
The case was settled in 2013 when the Supreme Court ruled that the government owns the shares funded by the coconut levy funds.
“Recapitalizing UCPB is a big step forward in implementing EO 179,” Finance Secretary Cesar Purisima said, adding that the bank’s recapitalization will also enable the government to get the best value for the coconut fund set aside for coconut farmers.
The Philippine Deposit Insurance Corp. (PDIC) said the recapitalization is an integral part of the 10-year rehabilitation plan for the bank agreed to by the PDIC, Bangko Sentral ng Pilipinas (BSP), Department of Finance and the Presidential Commission on Good Government in 2008.
PDIC President Cristina Orbeta said that while the bank’s financial position has continued to improve, even outperforming the targets under the plan, its growth potential has been tempered due to a lack of capital.