LANDBANK-UCPB merger clears way for further development of Philippine coconut industry

The United Coconut Planters Bank (UCPB) was one of the largest unibanks in the country before the Presidential Commission on Good Government (PCGG) sunk its claws into it. After 1986, the bank continued its sterling performance until the old guard were replaced by executives who managed to weasel their way in through political godfathers. The mismanagement led to UCPB faltering, even teetering on the brink of bankruptcy. Once the Supreme Court decided on the ownership issue, Eduardo Cojuangco Jr. (ECJ), pulled out of the bank he bought from his uncle, the father of former President Cory Aquino, and bought another bank instead.

With the establishment of the Coconut Farmers and Industry Trust Fund following the passage of RA 11524 will give the government enough financial leeway for Landbank to absorb UCPB and finally pursue further development of the coconut industry which continues to be a top export performer for the country. Capital expenditure will be required to upgrade and rehabilitate the oil mills under the umbrella of the Coconut Industry Investment Fund Oil Mills Group (​CIIF OMG). This was the old UNICOM or United Coconut Oil Mills setup by ECJ’s trusted lieutenant, Bobby Eduardo, who came with his purchase of Legaspi Oil, which was an Ayala-Mitsubishi joint-venture then. An assessment of the Landbank-UCPB merger by debt rating agency Fitch was given a negative spin in a PhilSTAR “report” published yesterday asserting that the “Merger with UCPB may hurt LANDBANK’s financial health”. However, Ian Nicolas Cigaral goes on to “report”…

But if worse comes to worst, Fitch said the government would likely step up financial support to save LANDBANK considering the important role it plays. Beyond its core mandate of promoting countryside development, LANDBANK was previously tapped to create an overseas Filipino bank and extend loans to pandemic-battered borrowers. There is also an ongoing plan for LANDBANK to purchase a stake in Philippine Dealing Systems Holdings, the country’s fixed income bourse.

“These state directives reinforce LANDBANK’s strategic importance in executing the government’s policy agenda, especially when transactions are undertaken on terms that might not have occurred if they were based on purely commercial considerations,” Fitch said. “These factors would be strengthened by the proposed merger,” it added.

Post-transaction, Fitch estimates that LANDBANK’s market share would increase by about 1.7 percentage points to make it the second-largest bank in the Philippines by assets next to BDO Unibank.

The Department of Finance has established an asset registry in order to take stock of the various oil mills, ancillary, trading companies, shareholdings and cash which were sequestered from Cojuangco after Ferdinand Marcos was ousted in 1986. The oil mills were under the indirect stewardship of Eduardo even after his appointment as head of San Miguel’s agribusiness division, which included its then aquaculture operations in Negros Occidental and Oriental and COMRO or the coconut oil milling and refining operations. Eduardo had set into motion expansion plans for the production of value-added coco-based products which were derailed after the unilateral sequestration of Cojuangco’s assets after his cousin became President.

Ramon Ortoll

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