President Rodrigo Duterte has approved the merger of state-owned banks Land Bank of the Philippines (LandBank) and United Coconut Planters Bank (UCPB).

Duterte inked Executive Order (EO) 142 on June 25, as he acknowledged that the merger of LandBank and UCPB will significantly strengthen the capability to deliver financial services to the coconut industry and the entire agriculture sector.

The LandBank-UPCB merger, Duterte said in EO 142, will also contribute to economic sufficiency, foster countryside development, and financial inclusion, and promote stability in the country’s banking system.

“The merger of the UCPB with the LBP is hereby approved, with the LBP as surviving entity, subject to the requisite approvals from the Securities and Exchange Commission, and to the conditions and limitations under RA (Republic Act) 11524 and RA 11232 or the Revised Corporation Code of the Philippines,” the order read, also referring to the popular acronym of LandBank.

Section 2 of RA 11524 or the Coconut Farmers Industry Trust Fund Act mandates the state to consolidate and hasten the delivery of benefits due to coconut farmers.

The UCPB and LandBank, in consultation with the Governance Commission for Government-Owned and -Controlled Corporations (GCG), will determine the mode of merger and implement the same with the approval of relevant regulatory agencies.

All assets and liabilities of UCPB will also be transferred to LBP.

The LandBank, according to the order, will acquire the outstanding Special Preferred Shares held by the Philippine Deposit Insurance Corporation (PDIC) in the UCPB.

EO 142 states that LandBank has to take into account the recovery of the PDIC’s financial assistance to the UCPB, the valuation of the shares by the PDIC and LBP for this purpose, and LandBank’s return on equity.

“It is understood that this approval shall be without prejudice to the terms and conditions set forth by the PDIC in its 08 February 2021 approval of the sale to the LBP of its Special Preferred Shares,” it said.

The UCPB and LandBank should also prepare and implement an integration plan towards the full implementation of the merger, in accordance with existing laws and regulations.

The LandBank may also adopt and implement a reorganization plan, as may be approved by the LandBank Board of Directors, subject to the requirements of RA 10149 or the GOCC Governance Act of 2011 and the rules and regulations of the GCG.

Under EO 142, LandBank and UCPB personnel who may be separated from the service as a consequence of the reorganization may be entitled to separation incentives.

All other government offices and agencies are directed to take prompt actions, as may be necessary and subject to applicable laws and regulations, to ensure the full implementation of the provisions of the Order six months after its effectivity.

EO 142, a copy of which was released by the Palace on Tuesday, takes effect immediately upon publication in the Official Gazette or a newspaper of general circulation.