By JOCELYN MONTEMAYOR and JIMMY CALAPATI
President Duterte has approved the merger of Landbank of the Philippines (Landbank) and the United Coconut Planters Bank (UCPB), both government-owned, paving the way for the creation of the second largest financial institution in the country.
In a press briefing, Presidential spokesperson Harry Roque said the President signed Executive Order No. 142 approving the merger. Executive Secretary Salvador Medialdea, by authority of the President, signed the order on June 25.
Under the merger, Landbank would be the surviving entity and all assets and liabilities of the UCPB shall be transferred to Landbank.
“The UCPB and Landbank shall prepare and implement an integration plan towards the full implementation of the merger, in accordance with existing laws and regulations,” the EO states. All agencies are also directed to take actions, subject to applicable laws and regulations, to fully implement the merger within six months from the effectivity of the EO.
The EO takes effect upon publication in the Official Gazette.
The EO states Landbank shall acquire the outstanding Special Preferred Shares held by the Philippine Deposit Insurance Corporation (PDIC) at UCPB, “taking into account the recovery of PDIC’s financial assistance to the UCPB, the valuation of the shares by the PDIC and Landbank for this purpose, and the Landbank’s return of equity.”
Cecilia Borromeo, Landbank president and chief executive officer, in a statement said the merger will “promote unprecedented rural development especially those in the countryside who belong to the underserved and unbanked sectors.”
“The merger will mean better financial services for UCPB clients, especially those who are in the farm sector. For the clients of both banks, the merger will mean they can now rely on a stronger and better capitalized institution with solid government support,” she added.
Borromeo said coconut farmers will be able to take advantage of the established expertise of Landbank in lending to the agriculture and agribusiness sectors.
“With the merged resources of Landbank and UCPB, we can bring closer to the farmers our services, as we are able to tap a combined total of 722 branches and servicing units, including those in the provinces,” Borromeo said.
Landbank’s management expertise is also expected to provide support to UCPB, thus protecting the interest of coconut farmers in the would-be merged banks.
Liduvino Geron, UCPB officer-in-charge (OIC), said the merger enables UCPB and its clients to benefit from the strength, stability, scale and reach of Landbank.
“This also allows us to pursue our original mandate to serve coconut farmers nationwide while providing a wider range of products and services to our clients composed of individuals, private and government institutions, middle-market companies, and small enterprises nationwide,” Giron said.
As of December 2020, Landbank’s agriculture loans reached 76.95 percent of its total loan portfolio, significantly above the minimum requirement of 15 percent.
Agrarian reform lending, meanwhile, hit 11.52 percent during the same period, also above the 10 percent required under the Agri Agra law.
Landbank’s agriculture lending has been consistently growing from P222.05 billion in 2018, to P236.31 billion in 2019, and P237.62 billion in 2020.
As of end-May 2021, Landbank’s loans to agriculture reached P230.02 billion, an increase of P73 million net from the P229.29 billion level in April 2021.
The number of farmers and fishers assisted by Landbank reached 2,734,572 as of May 2021, an increase of 31,323 from 2,703,249 in April 2021.
The EO also states personnel from Landbank who may be affected by the merger “shall be entitled to separation incentives fixed by Landbank Board of Directors while personnel of UCPB who may be separated from service due to the merger shall be paid separation benefits by UCPB.”
Whenever applicable, the EO provides Landbank may hire personnel separated from UCPB “subject to possession of civil service eligibility and other requirements prescribed for the position.”
The UCPB, a bank originally acquired for the benefit of coconut farmers, has been the subject of rehabilitation.
In July last year, the government expanded its majority stake in UCPB from 75 percent to 97 percent with the conversion of the P12 billion in capital notes that UCPB had issued to the Philippine Deposit Insurance Corporation (PDIC) into special preferred shares.
Aside from PDIC’s infusion of financial assistance into UCPB, the Bureau of the Treasury (BTr) also had extended another P30 billion deposit to provide income support to the bank.
