The government is winding down its support for the United Coconut Planters Bank (UCPB) and should soon set in motion a likely phased withdrawal of some P40 billion worth of national government deposits as its two-year support commitment lapses by year’s end.
This was learned last Friday from Finance Secretary Carlos G. Dominguez III who told financial reporters the restraining order preventing the sale of government-owned shares in the bank finally lapsed earlier this month.
With the temporary restraining order (TRO) lifted, the sale of government-owned shares in the bank to private investors has to proceed without fail as the government has no intention to remain a shareholder for long.
“I told them [management] we are not planning to extend it, so that gives us our own internal deadline,” Dominguez said of the anticipated phased withdrawal by national government deposits.
Such withdrawal should now compel the selling government shareholder to privatize the lender quickly while
ensuring the potential buyer or buyers have the wherewithal to inject fresh equity.
Officials said time and again the potential private investors should not only have pockets deep enough to purchase the government’s 73.9-percent UCPB shareholdings but have plenty more for fresh capital injection estimated to cost at least P15 billion.
The fresh capital infusion requires the purchase or subscription to 37.2 million UCPB common shares to bring the bank on even footing with existing universal lending peers in the industry.
“We have a bank that is about to be in play for privatization. We will have a price for the bank without any of the support. We are supporting the bank at the moment with deposits in excess of P40 billion,” Dominguez said and he told financial reporters the restraining order had lifted just days earlier.
Freed from the Supreme Court (SC)-issued restraint, Dominguez said the UCPB recapitalization program should be quickly pursued as national government support expires at the end of the year.
According to Dominguez, the government is evaluating the widom of injecting public funds as equity for a commitment that will expire at the end of the year.
“The capital program does not mandate anything. The capital program says that by 2018 whether [government support] will continue,” he said.
In 2015 the Privatization and Management Office suspended activities leading to the sale of the government’s controlling stake in UCPB.
The SC, following a petition by the Coconut Farmers’ Organizations of the Philippines, issued a restraining order that effectively halted all efforts at selling or reprivatizing UCPB.