The government tightened its hold on United Coconut Planters Bank (UCPB) after the state-run Philippine Deposit Insurance Corp. (PDIC) swapped its earlier relief funds for shares, the Department of Finance (DOF) said Friday.
In a statement, Finance Secretary Carlos G. Dominguez III said the government expanded its majority stake in the UCPB from 75 percent to 97 percent following the conversion of PDIC’s P12 billion in capital notes into special preferred shares.
Dominguez, who is also PDIC chairman, said the increase of the state’s majority shareholdings in UCPB “reaffirms the government’s commitment to support the bank.”
“The Duterte administration has followed the policy of strengthening the capital bases and rationalizing the structures of all government owned and controlled banks… with the objective of improving their level of service and value for their stakeholders, the Filipino people,” he said.
“This latest move of PDIC of converting the capital note it held to more permanent special preferred shares in UCPB is totally in line with the above objective,” he added.
To recall, UCPB obtained a P20 billion financial assistance from the PDIC as part of its recapitalization program in 2008, which included P12 billion in capital notes.
In 2018, UCPB completed its 10-year rehabilitation plan.
“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,” Roberto Tan, PDIC president said.
Tan added that aside from PDIC’s infusion of financial assistance into UCPB, the Bureau of the Treasury also had extended another P30 billion deposit to provide income support to the bank.
In 2015, the DOF attempted but later on deferred the safe of government stake in UCPB in an effort to recoup its financial assistance given to the bank, formally known as Cocobank.
In August 2019, Dominguez deferred the privatization of UCPB as it looks for ways to recover its earlier capital and deposit investments in the state-run lender, Dominguez said.