MANILA, Philippines - Newly-installed United Coconut Planters Bank (UCPB) president and chief executive officer Jeronimo U. Kilayko has expressed concern over what he describes as a serious dwindling in the number of standing coconut trees in the country. He has vowed to work with coconut farmers through a replanting program.
“I will be holding discussions with coconut farmers sitting in the bank’s board of directors for a coconut development program,” Kilayko said after officially taking over the post vacated by now retired bank president Ramon Y. Sy.
Aside from the financial needs of the coconut farmers, the Coconut Farmers Program Development Committee – will draw up a replanting program, a program to train farmers on business and accounting practices, and provide other allied and non-allied business needs of the farmers and their beneficiaries.
According to the Philippine Coconut Authority (PCA), millions of coconut farmers face a looming crisis, as their trees have become too old, losing much of their productivity.
More than 44 million coconut trees - 14 percent of the national total - are past their most fertile age, and without a sufficient replanting program the industry could be in dire straits.
In three to five years, the country will not be able to meet export demand.
Coconut products like dried coconut meat and coconut oil are the Philippines’ largest agricultural exports, earning $1.5 billion for the country last year.
PCA data indicate that production in 2011 is expected to reach only 2.57 million tons, down by more than 13 percent from 2010, while coconut oil exports are estimated to reach only 1.5 billion tons, down 30 percent from the year earlier.
The PCA said the National Government does not have enough money to support the industry, on which 25 percent of the country’s population is reliant.
The coconut authority said that without the participation of the private sector, coconut exports would fall drastically.
Meanwhile, Kilayko dispelled concerns that his recent appointment as the bank’s chief executive would be detrimental to the coconut farmers.
His detractors are claiming that he represents the interests of Eduardo “Danding” Cojuangco Jr.
Kilayko has served as UCPB chairman and chief executive officer from 1998 to 2002, as well as several UCPB subsidiaries, and vice chairman of the Bank of Commerce, which was also acquired by San Miguel Corp. subsidiaries; and, former president and board director of San Miguel Properties.
“It is not my relationship with one person but my being a professional banker that got me here,” he insisted.
In a recent interview, Kilayko said that he has also “demanded” that the present board must be a working board. “I want them to deliver.”
Kilayko was officially installed yesterday as the new chief executive of the bank.
“I want to insulate the bank from the political and legal disturbances,” he said, “but I hope the ownership issue is resolved.”
UCPB wants to open five more branches next year bringing its total branch network closer to the 190-mark. It has already renovated 60 branches, relocated 18; and opened five new ones this year, extending market presence to 183 locations.
But due to the unresolved ownership issues, the bank cannot raise capital in significant proportions, nor can it invite equity from foreign or local players. It had been limited to the conservative long-term negotiated certificates of time deposits (LTNCD), which cannot raise significant amounts to acquire another bank.
“We have to maximize our earning capabilities, while at the same time continue to clean our books,” Kilayko added.
The bank has cleaned its vaults of bad debts which reached P30 billion, which it acquired from the Antiporda period (prior to 1986). Majority of the bad debts were then sold to special purpose vehicles (SPAV) or settled.
It was during the years 1988 to 2002 when this situation came about, leading to the process of rehabilitating the bank. It was during this period that Kilayko served as bank chairman and chief executive officer, with Lorenzo V. Tan as president and chief operating officer.
The bank has since registered net profits and returned to the list of profitable banks in the Asia Pacific region.
Last year, it posted a net income of P2.39 billion, exceeding by 44 percent the previous year’s P1.66-billion profit. Higher loan and investment volumes, better margins, hefty trading gains and lower fund cost propelled last year’s earnings growth.
In the first nine months this year, the bank reported a 20-percent increase in net earnings to P2.25 billion, from the P1.88 billion in the same period in 2010.
Kilayko said they would be contented with an average income growth rate of 15- to 24-percent in the next few years, assuming that the ownership issue will remain unresolved.
“These are very challenging times where the present players are more competitive and technology-driven,” he added.
Proof of the profitability of the bank despite its limitations, is that it landed among the top 500 banks in Asia, ranking 387th or an improvement from the 406th spot it held in 2010.
A total of 16 Philippine banks made it to the top 500 list and UCPB was ranked 10th.
Domestic and foreign banks have openly expressed interest in acquiring UCPB “if not for the ownership issue.” They said that despite its limitations, it has continued to be a profitable bank registering profits since 2009.