By Eileen A. Mencias

Lack of viable investment instruments has delayed the release of P30 billion in government assistance to ailing United Coconut Planters Bank.

UCPB executive vice president Cesar Rubio said the bank had received some P6 billion from the national government since Dec. 18 and stood to get more pending the next primary auction of government securities.

National Treasurer Roberto Tan said UCPB wanted to invest the P30-billion assistance in 10-year government bonds. Bond prices in the secondary market, however, are too expensive for UCPB to earn money.

UCPB, the Finance Department, Philippine Deposit Insurance Corp. and the Bangko Sentral signed a memorandum of agreement on the bank?s rehabilitation program. The program would have expired on Dec. 24 but Rubio said the release of the funds that began in Dec. 18 kept the agreement in force.

UCPB?s rehabilitation program involves three components, namely central bank?s approval of the business plan, a P30-billion deposit from the government as income support with the bank investing the money in government securities and the conversion of the PDIC?s remaining P12-billion loan into equity.

?Everything is in place except that we?re waiting for the rest of the national government deposit but it is available when we need it,? Rubio told Standard Today in a phone interview. ?We?re just waiting for the next auction of government securities. If we buy it over the counter or in the secondary market, there?s a premium. We?re waiting for a primary issue.?

Once UCPB receives the rest of the P30-billion assistance from the national government, Rubio said PDIC?s P12-billion loan to the bank would then be converted into equity, easing the strain on the bank?s finances.

Tan said UCPB would incur an additional cost if it bought the government securities over the counter.

Tan said in a separate phone interview that UCPB preferred to invest the money in 10-year bonds because of higher yields. The government plans to issue 10-year zero-coupon bonds in February.

?Hopefully, the bank can buy then,? Tan said.

UCPB was once among the country?s largest bank until the government sequestered it and took control in the 1980s. With the ownership issue unsettled, the bank failed to conduct a stockholders? meeting.

The sequestration has also restrained UCPB from building up its capital base.

UCPB assets in 2008 rose 12 percent to P114.4 billion from P101.68 billion in 2007, while loans expanded 48 percent to P32.5 billion, Rubio said.