The government blueprint for privatizing the United Coconut Planters Bank (UCPB) may have been poorly framed, its terms inspiring distrust that eventually forced a group of coconut farmers to seek redress from the Supreme Court (SC) that then issued a temporary no-sale order.
This sentiment was expressed by Cesar Rubio, CFO at UCPB in briefing financial reporters only recently. He, likewise, expressed apprehension that a protracted legal tussle with the coconut farmers result to financial ruin at some point in the future from which the bank may not be able to recover.
“Let me try to explain why we think the farmers [were granted] a temporary restraining order [TRO]. If you read the executive orders [EOs], it said the government will conduct an inventory of the coco-levy assets, and then we start disposing of the assets and the funds will go to a special account in the Treasury,” Rubio said of what is at the core of the ongoing tussle.
He said the complaining coconut farmers have refused to buy the promise that the proceeds of the planned sale of the assets of UCPB would benefit the group given the manner by which the postsale mechanism had been structured.
“So the farmers did not completely buy that because they said, if the funds will go to the Bureau of the Treasury, how can it be given back as a fund for the farmers? So it was not very clear in the EO. That is the way I personally see it,” Rubio said.
The EOs pertain to EO 179 and EO 180 that would have made possible the sale or privatization and reconveyance to the government of over P74 billion in so-called coco-levy funds the SC previously declared as public funds.
Rubio said the UCPB is missing out on potential gains the strong and resilient economy has to offer due to the TRO
issued against the bank last year.
Still, Rubio said they still have time to sort out the conflicting signals and infuse additional capital as soon as this was possible for the lender to compete more effectively with other local banks.
According to him, UCPB had been given several opportunities that would have vastly improved its financial standing had actual events proved more benevolent than they had been thus far.
“For example, the Bangko Sentral ng Pilipinas approved of the measure further liberalizing ownership by foreign entities and the entry of more potential investors. Second, the ownership [of UCPB] was resolved so it could now raise capital on its own. Third, the Philippines has become an attractive investment destination in Asia and foreign investors want to get in on the local action. So we have known investors even local and foreign,” he said.
Foreign banks have since shown interest in taking equity position in local banks, the most recent case involving Security Bank and the entry of the Bank of Tokyo
Mitsubishi-UFJ.
UCPB does not have the luxury of time on the issue of new and expanded capital, as global rules now mandate strict compliance with the Basel 3 requirements by 2018.
“We have until 2018 to comply with Basel 3. We don’t have to comply immediately. So, technically, we still have until 2018 to be able to raise capital to move to Basel 3,” he said.
“We still have two years to go before 2018. After waiting for 30 years, what’s two more years,” he added.