UCPB privatization credit positive — Moody’s

Credit rating agency Moody’s Investors Service said yesterday the government’s plan to pursue the privatization of United Coconut Planters Bank (UCPB) would be a “credit positive” for the bank as the move would beef up its capital.

Moody’s said the sale of the government’s 73.9 percent stake in UCPB to a new major shareholder would be beneficial to the bank and enable it to raise its equity capital, in compliance with Bangko Sentral ng Pilipinas (BSP) requirements.

“A successful privatization of UCPB will help the bank raise new equity capital to meet Basel III capital requirements, a credit positive. And if a larger bank acquires UCPB, we expect that UCPB’s credit quality would benefit from the support of its new majority shareholder,” Moody’s said.

“If the privatization and recapitalization are successful, the new equity capital will support UCPB’s growth and maintain its minimum Tier 1 capital ratio above a 10 percent requirement that includes a capital conservation buffer required for all Philippine banks,” it added.

Last week, Finance Secretary Carlos Dominguez said the government would proceed with the stalled plan to privatize the UCPB after the Supreme Court lifted a temporary restraining order it imposed on the use of coco levy assets.

Dominguez said the process should be implemented quickly as the government has no plans to extend the financial support it gives the bank beyond the expiration of UCPB’s 10-year rehabilitation plan in 2018.