De Lima seeks probe into planned merger of Landbank & UCPB

Opposition Senator Leila M. de Lima urged Congress to investigate the planned merger of the Landbank of the Philippines (Landbank) with United Coconut Planters Bank (UCPB) which was purportedly made under questionable terms and conditions, and with serious apprehension and warning from a credible credit rating agency.

De Lima, Chairperson of the Senate Committee on Social Justice, Welfare and Rural Development, filed Senate Resolution (SR) No. 771 urging the appropriate Senate Committee to look into the planned merger of the two state-owned banks to ensure that the rights of coconut farmers as well as Filipinos who are being served by the Landbank are not unduly compromised by the merger.

"It behooves upon the Senate to determine whether the Landbank's absorptive capacity would allow it to carry the liabilities and obligations of UCPB without, or at least with very minimal impact, on the Filipinos its charter intends to cater and serve," she said.

"The contrasting mandates of Landbank and UCPB should be reason enough to question, if not forthwith demand, the termination of the merger proceedings, as was done by the government when it halted the merger proceedings involving DBP and Landbank in 2016," she added.

Last June 25, Executive Secretary Salvador Medialdea, by the authority of the President, signed Executive Order (EO) 142 ordering the merger of Landbank and UCPB.

American Agency Fitch Ratings analyzed that the Landbank-UCPB merger may have a "negative impact on Landbank's credit profile," and inevitably hurt the former's financial health given the latter's weak financial position. It cited UCPB's reported ?22 billion bad debts as of 2020 as among the biggest threats to the merger.

The agency also noted that the said merger will exacerbate asset quality pressures that Landbank is already besieged with as brought about by the current economic slowdown.

Prior to these, in 2020, the leaders and members of the Confederation of Coconut Farmers Organizations of the Philippines expressed their "strong opposition" to the then only intended merger of the said banks, stressing that this is actually contrary to the intent of the law which created UCPB to address the credit needs of coconut farmers.

The lady Senator from Bicol said the government must protect the public from disadvantageous negotiations, agreements and deals of financial institutions, especially of those owned by the State by intensifying existing legislation and exercising its oversight functions in order to prevent financial institutions from engaging in wash sales.

"With Landbank's charter mandating it to prioritize the banking needs of the agrarian reform program and other rural groups including the fisherfolk, as well as servicing the needs of OFWs, it should not be distracted therefrom to the possible detriment of these people whose welfare is at stake. UCPB's mandate is clear: to service Philippine coconut farmers," she said.

"Their interests should not be comingled, and inescapably sidelined by executive fiat when evidence is incontrovertible that, with the conflicting mandates of these two institutions, and the already burdened Landbank clients who are still reeling from the impacts of the pandemics, it would not be prudent to proceed with the said merger," she added.

De Lima further noted that the Senate should inquire into the validity of the merger, as well as into the anomalies that gave rise to the need for such.

"If need be, the veil of corporate fiction should also be pierced in order to hold individuals who may have machinated the merger, to the fullest extent of the law," she said.

"Dapat lang naman na bago ipatupad ang ganito kalaking hakbang na sangkot ang mga institusyon ng Estado, ay dumaan ito sa ibayong pagsusuri, lalo pa kung matunog ang mga pag-aaral sa posibleng negatibong epekto nito.

Sa huli, hindi puwedeng ang mga magsasaka at mga kababayan nating nangangailangan na dapat naseserbisyuhan ng mga bangkong ito ang madehado, " she added.