Manila, July 3, 2003 By Des Ferriols (Star) With all terms ironed out and agreements ready for official signing, the financial agreement package for the United Coconut Planters Bank is having difficulties getting Malacañang’s approval.

Sources from the banking sector told reporters yesterday that, considering the magnitude and impact of UCPB’s possible collapse, the Arroyo administration cannot afford to delay the financial rescue of the bank, but "political exigencies" are blocking the conclusion of an otherwise simple agreement.

According to the sources, the approval of the financial assistance package from the Philippine Deposit Insurance Co. (PDIC) needs the go-ahead of everyone concerned, "from the UCPB board to all the way to the Pasig River (Malacañang)."

Sources said the stamp of approval from the "Pasig River" is being delayed and complicated by talks with businessman Eduardo "Danding" Cojuangco Jr., whose business interests are intimately tied to the controversial coconut levy fund originally created and still held in trust by UCPB.

According to the sources, the UCPB is being used as a pawn to pressure Cojuangco, who has indicated an intention to run for president in 2004.

One source said UCPB is the key to the administration’s "hold" on Cojuangco, who still has claims on various businesses created by the proceeds of the Coconut Industry Investment Fund (CIIF).

These businesses, now estimated to be worth at least P80 billion, have been sequestered by the Presidential Commission on Good Government (PCGG).

"UCPB is the key to Cojuangco, it’s the only key," the source said.

Pending Malacañang’s approval is the P20 billion financial assistance package that would involve the issuance of hybrid tier 2 bonds and the sale of bank assets amounting to P13 billion.

The assistance package came out after months of complex negotiations between PDIC , UCPB, various government agencies, coconut industry representatives and other interest groups with pending claims on the controversial coconut levy fund that originally created the bank, Cojuangco included.

UCPB has already advanced P5 billion from the PDIC, but the financial package has not been officially signed.

Last April, UCPB emerged with the weakest capital base in the entire commercial banking industry, as its total equity as a percentage of its total assets declined to 2.89 percent of its Dec. 17, 2002 statement of condition.

The capital ratio is an indication of a bank’s capital base and its ability to absorb bad loans.

Reported by: Sol Jose Vanzi

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