Sequestered Philippine bank moves closer to financial rehabilitation

Government auditor begs to differ, however.

The Philippine Deposit Insurance Corporation said sequestered United Coconut Planters Bank could reasonably expect an early exit from financial rehab with PDIC set to recover its exposure in the sequestered bank.

UCPB reported net income of US$89.6 million in 2012, up 28% from US$69.9 million in 2011. In 2010, the bank booked an income of US$56 million, 47.6% higher than the US$37.9 million in 2009. UCPB posted a US$61.9 million net loss in 2008.

The Commission on Audit, the national government auditor, however, said the increase in net income is not reflective of the true financial position of UCPB because the total unbooked valuation reserves and deferred losses were not considered in the computation of its equity. It asked PDIC to recognize the 2012 impairment loss of US$530 million in UCPB’s books.

COA said verification of the sequestered bank’s 2012 financial statement revealed the national government maintains its US$686 million deposit with UCPB.

PDIC said the grant of financial assistance was for the protection of the thousands of UCPB depositors. It noted that because of UCPB’s standing in the banking industry and financial community, the government deemed it best to address the sequestered bank’s financial problems to avert further financial deterioration.