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LANDBANK’s assets to reach P3 trillion after merger with UCPB

LAND BANK of the Philippines’ (LANDBANK) merger with United Coconut Planters Bank will result in combined assets worth P3 trillion by the end of the year, with expected regulatory relief measures to help the surviving entity weather the financial impact of the transaction.

“The merged assets will significantly grow LANDBANK’s loan portfolio directed at servicing the whole agriculture sector, especially coconut farmers, alongside key development industries. The synergy created by the merger will provide a much better position for us to respond to the evolving needs of our diverse clientele, especially the underserved and unbanked,” LANDBANK President and CEO Cecilia C. Borromeo was quoted as saying in a statement on Sunday.

Executive Order (EO) No. 142 signed by President Rodrigo R. Duterte on June 25 approved the LANDBANK-UCPB merger. All assets and liabilities of UCPB will be transferred to LANDBANK.

The merger was considered because of the two banks’ shared objectives and interrelated mandates, the EO said. LANDBANK mainly lends to the agriculture sector, while UCPB was originally acquired by the government for the benefit of coconut farmers.

The provisions in the order are expected to be fully implemented within six months from its effectivity.

LANDBANK’s assets reached P2.405 trillion as of end-March, the second biggest in the industry. Meanwhile, latest central bank data showed the assets of UCPB amounted to P327.39 billion as of December 2020.

The lender said it has conducted due diligence and has asked the Bangko Sentral ng Pilipinas and the Monetary Board to review and approve the processes and transactions to be involved in the merger.

LANDBANK said its impending acquisition of UCPB’s shares of stock, assets and liabilities will also expand its own deposits, loans, and capital.

It said based on initial projections, its common equity Tier 1 ratio post-merger will remain higher than the 11% minimum required by the BSP.

Ms. Borromeo said they have also requested the BSP to grant LANDBANK incentives usually given to banks undergoing mergers and consolidation.

She said these relief measures will give the bank more flexibility in managing its capital, as well as help it achieve operational efficiency and minimize the expected impact of the merger on its balance sheet.

“LANDBANK is more than capable of absorbing the financial impact of the merger with UCPB. Our ratios will remain comfortably above the standards set by the BSP,” Ms. Borromeo said.

Fitch Ratings on Thursday said the proposed merger between the lenders will likely affect the credit profile and profitability of LANDBANK in the near term due to UCPB’s weak financial health and stock of soured loans.

A technical working group will be in charge of the integration plan for the merger. It will include LANDBANK’s Ms. Borromeo and UCPB Officer in Charge Liduvino S. Geron. Representatives from the Governance Commission for Government-owned and -controlled Corporations, the Securities and Exchange Commission, the Department of Finance, the Department of Budget and Management, and the Commission on Audit will also be part of the team.

“Clients of both LANDBANK and UCPB are being assured that banking services will continue to be unhampered throughout the ongoing merger process, with deposits to remain intact and secured in their current servicing branches,” LANDBANK said. — LWTN

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