May 31, 2015

Gov’t sets terms for UCPB sale

According to an article from BusinessWorld, the government has set the terms for the sale of its 73.9% stake in United Coconut Planters Bank (UCPB). The Finance department’s Privatization and Management Office (PMO) has invited various bidders for the government’s UCPB stake, saying that it has set the deadline for bids on 18 Sep 2015.

Further, the PMO will require a capital infusion of at least P15b, on top of the 1.1b shares that the government owns, which will be sold for a minimum price of P1/sh. The article also quoted PMO as saying that the highest financial bid shall be subject to the pre-emptive rights of pre-transaction UCPB stockholders. Moreover, the highest bidder will be required to make an offer to acquire the UCPB common shares of pre-transaction stockholders.

Our take: As of end-2014, UCPB had P389b in assets, P141b in loans, P282b in deposits and P52b in capital. Given the size of UCPB, we surmise that the country’s biggest banks (BDO, BPI, MBT) would be the ones that may be interested in bidding for it. Smaller banks that are looking to expand (such as SECB and EW) may also end up bidding for the stake.

However, given the size of the required capital infusion, it is likely that the winning bidder may need to conduct a share issuance in order to raise funds for the UCPB acquisition. Moreover, big foreign or regional banks may also be interested in bidding, as acquiring UCPB may fast-track their foray into our country’s banking system. In any case, the UCPB bidding should help in generating interest and facilitating further consolidation in the local banking industry. – WealthSec