Government to privatize UCPB

MANILA, Philippines — The government remains keen on pushing through with the privatization of the United Coconut Planters Bank (UCPB), the Department of Finance (DOF) said last week.

During a forum organized by the Manila Overseas Press Club, Finance Secretary Carlos Dominguez III said the UCPB is currently in the list of assets to be sold under the government’s privatization program.

The announcement came days after the Supreme Court (SC) lifted the temporary restraining order (TRO) on the use of the P75 billion coco levy funds.

“We have a bank that is supposed to be in play for privatization,” Dominguez said, confirming thereafter that he was referring to UCPB.

According to Dominguez, the national government is currently providing financial support to the bank through placements in Treasury-bills for the bank’s capitalization program, which will lapse by the end of 2018.

In 2013, the UCPB announced that its shareholders approved the increase in its capital to P40 billion in compliance with the Bangko Sentral ng Pilipinas’ (BSP) requirements on the Basel III leverage ratio.

This recapitalization program is also part of the 10-year rehabilitation plan of the bank which started in 2008.

The finance chief said the DOF is not inclined to continue providing assistance to the UCPB once its capitalization program ends by 2018.

“The capital program of UCPB is expiring on Dec. 31, 2018, and we are not inclined to have it (continued)...I told them we are not planning to extend it so that gives our own internal deadlines. It must be either sold or not sold,” Dominguez said.

In 2013, the SC ruled that 72.2 percent of the equity stake in UCPB is owned by the government as it was acquired using “coco levy” funds or taxes collected from coconut farmers through Presidential Decree 755 in 1975.

Two years later, former president Benigno Aquino III signed Executive Oder 179 ordering the inventory, transfer, reconveyance and disposition of coco levy assets for the benefit of the coconut industry, as well as the recapitalization of UCPB through privatization.

He also issued EO 180 which mandates the use of the assets for an “Integrated Coconut Industry Roadmap.”

The Privatization Council then approved the public bidding for the 72.2 percent stake of the government in UCPB that was supposed to be conducted in September 2015.

However, the planned sale did not push through after the SC issued on June 2015 a TRO, stalling the implementation of EO 179 and 180. This was based on the petition filed by the Confederation of Coconut Farmers’ Organizations of the Philippines.

The high court lifted the TRO last week, but at the same time voided four sections in the Guidelines for Utilization of Coco Levy Funds.

The SC also maintained that coco levy assets are owned by the public, and said the Congress must first provide a law for the disbursement of the funds.