The government increased its stake in the United Coconut Planters Bank (UCPB) to 97% from 75% previously, the Department of Finance (DoF) said, while placing a P30 billion deposit to support the bank.

In a statement Friday, Finance Secretary Carlos G. Dominguez III said the government converted into special preferred shares P12 billion worth of notes that UCPB had issued to the Philippine Deposit Insurance Corp. (PDIC).

UCPB issued the notes to PDIC in 2009 as part of the bank’s recapitalization program.

The notes are convertible to special preferred shares and the PDIC exercised this option, “effectively increasing the government’s shareholdings in UCPB to 97%,” PDIC President Roberto B. Tan was quoted as saying.

Mr. Tan added that the Bureau of the Treasury (BTr) also made a P30 billion deposit to UCPB to support the bank.

Mr. Dominguez, who chairs the PDIC board, said the move “reaffirms the government’s commitment to support the bank.”

In a Viber message, he told reporters Friday that the administration has been following the concept of “strengthening the capital bases and rationalizing the structures” of government-owned financial institutions including UCPB, Land Bank of the Philippines (LANDBANK), the Development Bank of the Philippines and the Overseas Filipino Bank (OFBank).

“[The policy has] the objective of improving their level of service and value for their stakeholders, the Filipino people. This latest move of PDIC of converting the capital note it held to more permanent special preferred shares in UCPB is totally in line with the above objective,” he said.

“We expect the Board of UCPB to consider re-orienting their focus on serving the farmers and processors of coconut andother vegetable oil products, but balancing their portfolio with exposure to other industries and clients in the middle market,” Mr. Dominguez added. — Beatrice M. Laforga