SAN MIGUEL CORP WON'T PULL OUT DEPOSITS AT UCPB - DANDING

Manila, July 15, 2003 By Des Ferriols (Star) Despite the decision of the Sandiganbayan that effectively took his 7.2-percent equity in United Coconut Planters Bank (UCPB), businessman Eduardo "Danding" Cojuangco said he has no plans of pulling out the deposits of San Miguel Corp. (SMC) from the bank.

"We have no bad motives here," Cojuangco told reporters. "But if SMC needs the funds in the regular course of business, well, ganoon talaga yun (that’s the way it is)."

Cojuangco said he has no idea how much SMC’s deposits are with UCPB. The government-controlled bank is SMC’s only depository bank although he said SMC is "also doing business with a number of other banks."

Market observers noted that the Sandigang Bayan decision was not well-received by UCPB depositors even as bank management was quick to point out that the decision was "good for the bank."

Newly-appointed UCPB chief executive officer Jose Querubin said in a telephone interview that reports of a bank-run were "irresponsible".

"I have been telling our depositors that this is good news for the bank," Querubin pointed out. "The uncertainty over the ownership of the bank has been partially cleared and that was the only thing preventing investors from coming in."

After the Sandiganbayan decision, Querubin said the rehabilitation of the bank now appears clearer and the possibility of recapitalization has become more possible in the immediate future.

Querubin also expressed optimism that SMC would not pull out its deposits with UCPB, regardless of the outcome of the pending court case.

"Of course it’s SMC’s call whether to pull out or not but Mr. Cojuangco is a businessman," Querubin said. "Our dealings with SMC (are) always at arms length (and) there is no reason for them to pull out since we provide good banking service. I wouldn’t think they will want to pull out."

Finance Secretary Jose Isidro Camacho said the government is prepared to bail out UCPB should the developing events lead to a crisis in the bank.

"If we were willing to help the bank when it was not clear who owned it, why wouldn’t we be more willing to help it out now that it has been ruled that it is government-owned?" Camacho said. "The fact that it is government-owned gives us more reason to keep it stable."

Camacho, who is chairman of the Philippine Deposit Insurance Corp, said the second tranche of the P20 billion bail-out package would be ready for disbursement within the next six months.

"We’re only concluding certain documentation requirements but we expect the next P15 billion to come in shortly," Camacho said.

PDIC advanced P5 billion to UCPB last May as part of a financial assistance package that involves the immediate issuance of P2 billion worth of Tier 2 notes and the subsequent issuance of another P5 billion tranche of Tier 2 bonds.

The remaining P13 billion would be infused by the PDIC through the direct acquisition of P8 billion worth of non-performing loan (NPL) and P7 billion worth of NPLs with a buy-back option.

According to Querubin, the initial plan was to turn the bank around within three to five years. Ultimately, he said it is critical for a new investor to come and recapitalize the bank.

"This is all temporary," Querubin said. "The idea of the PDIC assistance is that eventually, it will leave when the bank is strong enough. We estimate that it will take three to five years, maybe even shorter now that the ownership issue has been cleared up."

Querubin said the PDIC’s first order of business at UCPB is to stabilize management and ensure that the appointed people are not co-terminus with the ruling administration in government.

"We will continue managing the bank like professionals," he said.


Reported by: Sol Jose Vanzi

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