The merger of state lenders Land Bank of the Philippines (Landbank) and United Coconut Planters Bank (UCPB) will be completed in early 2022, after approval by regulators, Landbank Chief Executive Officer Cecilia Borromeo said Thursday.
The merged Landbank and UCPB will become the second largest bank in the Philippines with around 2.7 trillion pesos in combined assets, just behind BDO Unibank.
While the UCPB has not yet legally merged with Landbank, the former is now a subsidiary of the latter, Borromeo said in a text message.
“We are currently working to obtain all the necessary regulatory approvals. We expect the merger to be implemented in the first quarter of 2022, ”Borromeo said.
Borromeo would not say which regulators had not yet given the green light to the Landbank and UCPB merger.
As a reminder, President Duterte issued Executive Decree No. 142 in June, which triggered the merger of the two government financial institutions, with Landbank as the surviving entity.
In a message sent Thursday to clients and creditors of Landbank and UCPB, Borromeo assured them of a “smooth” merger process.
“Rest assured that your deposits will remain intact and secure, and that your banking transactions will not be hampered or interrupted. We will also ensure that the rights of all depositors and clients are respected and protected, ”Borromeo said.
Borromeo said the merger would result in a “stronger, more resilient and unified banking institution,” which would also foster financial inclusion, especially among still unbanked and underserved Filipinos.
Borromeo said Landbank was “more than capable of absorbing the financial impact of its merger with the UCPB”.
“The impact on its profitability, liquidity and solvency ratios will be manageable, and its performance ratios will remain well above the standards set by the Bangko Sentral ng Pilipinas (BSP),” Borromeo said.
According to industry sources, the government decided to merge the two banks because the capital adequacy ratio (CAR) of the UCPB was set too below the mandatory level of the BSP.
Without the capital notes of the state-run Philippine Deposit Insurance Corp., which saved the UCPB in the past, the bank would not have met the RCA requirement, sources said.
—Ben O. from Vera
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