The merging of the LBP and the UCPB has been approved by Duterte
Several state-owned banks, including the Land Bank of the Philippines (LBP), United Coconut Planters Bank (UCPB), have been authorized for merger by President Rodrigo Duterte (UCPB).
With the signing of Executive Order 142 on June 25, Duterte recognized that the merging of LBP and UCPB would greatly enhance the capacity of the two institutions in terms of providing financial services to the coconut industry and the whole agricultural sector in the Philippines.
According to Duterte’s Executive Order 142, the LBP-UPCB merger would also help to economic self-sufficiency, boost rural development and financial inclusion, and enhance stability in the country’s banking sector.
In the order, it was stated that the merger of the UCPB with the LBP was approved, with the LBP as the surviving entity, subject to the necessary approvals from the Securities and Exchange Commission as well as the conditions and limitations set forth in Republic Acts (Republic Acts) 11524 and 11232, or the Revised Corporation Code of the Philippines.
Section 2 of the Coconut Growers Industry Trust Fund Act, also known as the Coconut Farmers Industry Trust Fund Act, directs the state to consolidate and expedite the distribution of benefits owed to coconut farmers.
With the assistance of the Governance Commission for Government-owned and -controlled Corporations (GCG), both the UCPB and the LBP will decide the method of merger and execute it after receiving the necessary approvals from relevant regulatory authorities.
All of the assets and liabilities of UCPB will be transferred to LBP as part of the transaction.
As a result of this order, the LBP will purchase all of the outstanding Special Preferred Shares in the UCPB that are currently owned by the Philippine Deposit Insurance Corporation (PDIC).
As stated in EO 142, the LBP must consider the recovery of the PDIC’s financial assistance to the UCPB, the value of the shares by the PDIC and LBP for this purpose, as well as the LBP’s return on equity in making its decision.
According to the document, “it is understood that this permission shall be without prejudice to the terms and conditions set out by the PDIC in its approval of the sale to the LBP of its Special Preferred Shares dated February 8, 2021,” the PDIC stated.
In addition, the UCPB and LBP shall develop and execute an integration strategy to ensure that the merger is fully implemented in compliance with applicable laws and regulations.
Under the provisions of Republic Act No. 10149, or the GOCC Governance Act of 2011, as well as the norms and regulations of the Global Corporate Governance (GCG), the LBP may also establish and execute a reorganization plan, which must be authorized by the LBP Board of Directors.
In accordance with Executive Order 142, LBP and UCPB employees who may be terminated from their positions as a result of the restructuring may be eligible to receive separation incentives.
All other government offices and agencies are instructed to take timely measures, as may be necessary and in accordance with relevant laws and regulations, to ensure that the contents of the Order are fully implemented six months after it becomes effective.
The Executive Order 142, a copy of which was made available by the Palace on Tuesday, becomes effective immediately after it is published in the Official Gazette or a newspaper of wide distribution.