The merger between Land Bank of the Philippines and United Coconut Planters Bank will strengthen government efforts to build a stronger, unified banking institution capable of serving coconut farmers and other workers in the agricultural sector, a top LandBank executive said Tuesday.
President Rodrigo Duterte ordered LandBank and UCPB under Executive Order 142 to enter into a merger applicable to government-owned and -controlled corporations and recognized by regulatory agencies.
LandBank, the biggest public sector bank in the country with total assets of P2.362 trillion as of end 2-2020, will be the surviving entity under the merger. UCPB reported total assets of P358 billion as of end-2019.
LandBank president and chief executive Cecilia Borromeo said the merger would promote unprecedented rural development, in keeping with the government’s goal of expanding financial inclusion among Filipinos, especially those in the countryside who belong to the underserved and unbanked sectors.
“LandBank’s track record of being consistently compliant with the Agri Agra Law shows our commitment to perform our mandate, to empower not only the farmers but all workers in the agriculture sector,” she said.
Republic Act No. 10000, or the Agri Agra Law, mandates banks to allot 15 percent of their total lending portfolio for agriculture loans and 10 percent of its total loanable funds to agrarian reform beneficiaries.
LandBank said that as of December 2020, its agriculture loans reached 76.95 percent of its total loan portfolio, above the minimum requirement of 15 percent. Agrarian reform lending hit 11.52 percent during the same period, also above the 10-percent required under the Agri Agra law.
LandBank’s agriculture lending consistently grew from P222.05 billion in 2018 to P236.31 billion in 2019 and P237.62 billion in 2020.
LandBank said that this year, its loans to agriculture reached P230.02 billion as of May, an increase of P73 million from P229.29 billion in April 2021. The number of farmers and fishers assisted by the bank reached 2,734,572 as of May 2021, an increase of 31,323 from 2,703,249 in April 2021.
“With the merged resources of LandBank and UCPB, we can bring closer to the farmers our services, as we are able to tap a combined total of 722 branches and servicing units, including those in the provinces,” Borromeo said.
She said the proposed merger “will also be beneficial to existing UCPB clients because they can access the bigger branch and ATM network of LandBank and will be able to avail of a wider range of products and services such as the digital banking service.”
LandBank’s management expertise is also expected to provide support to UCPB, thus protecting the interest of coconut farmers in the would-be merged banks.
“Our goal is to ensure that we are able to efficiently manage and protect government resources in these banks for the ultimate benefit of the Filipino people. With the merger, we will be in a better position to grow our loan portfolio in order to meet the needs of the people, especially the unbanked and underserved Filipinos,” Borromeo said.
“The merger will also mean better financial services for UCPB clients, especially those who are in the farm sector. For the clients of both banks, the merger will mean they can now rely on a stronger and better capitalized institution with solid government support,” she said.
UCPB officer-in-charge Liduvino Geron said the merger would enable UCPB and its clients to benefit from the strength, stability, scale and reach of LandBank.
“This also allows us to pursue our original mandate to serve coconut farmers nationwide while providing a wider range of products and services to our clients composed of individuals, private and government institutions, middle-market companies, and small enterprises nationwide,” Geron said.
Once the merger is concluded, LandBank will remain as the industry’s second biggest bank in terms of assets and deposits.