About United Coconut Planters Bank (UCPB)
GOVERNMENT-sequestered United Coconut Planters Bank (UCPB) is planning on tapping the local debt market within the year to raise financing for its expansion plans."We will ask the central bank for authority to issue Tier 2 capital," said Ramon Y. Sy, UCPB president and chief executive officer, in an interview.
He said the bank targets to raise around P4 billion-P5 billion.
Lower Tier 2 capital is supplementary capital in the form of fixed-rate debt papers subscribed to by investors. Investors’ claims are ranked below those of depositors and senior creditors in the event of bank closure.
Mr. Sy said the bank will propose the plan to the regulator, as it has not been allowed to raise capital since 1986 due to an ownership dispute.
In 2003, the Sandiganbayan ruled that businessman Eduardo "Danding" Cojuangco, Jr. illegally acquired UCPB shares by using some P160 billion in coco levy funds. This allowed the Presidential Commission on Good Government to take over the bank’s board.
Mr. Sy said the funds raised would be used to upgrade its information technology (IT) platform.
He said the bank is planning to spend a total of P1.4 billion in the next three to four years to update its automation system.
"We have to automate because we have fallen behind [in terms of IT development]. We have not been able to update our systems for many years. Our product development has been put at the backburner because [of our outdated IT system]," Mr. Sy said.
"We are changing a lot of things to improve our efficiency," he added.
Mr. Sy also said the bank intends to expand its branch network to a total of 350 in the next three to four years. UCPB currently has 178 branches, while its thrift bank subsidiary UCPB Savings bank has 33.
"We need more branches to be able to compete," he said.
The bank’s plan to hike its capital followed the government’s infusion of P30 billion in deposits as well as the conversion of a P12-billion loan from the Philippine Deposit Insurance Corp. (PDIC) into equity or Tier 1 capital.
UCPB, the 12th largest lender in the country with assets of P151.58 billion as of end-June, booked a net income of P336 million in the first half, a big turnaround from a net loss of P1 billion in the same period last year.
Its plan to float Tier 2 debt would follow the issuances made by other universal banks earlier this year, which aimed to strengthen their capital positions.
Banco de Oro Unibank raised P3 billion in lower Tier 2 notes in March; Metropolitan Bank and Trust Co., P4.9 billion in April; and Rizal Commercial Banking Corp., P4 billion in May
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