The Manila Times
THE government is moving to merge stateowned Land Bank of the Philippines (LandBank) and the Development Bank of the Philippines (DBP) in a bid to strengthen the country’s financial system, Finance Secretary Benjamin Diokno said on Tuesday. “By merging the two, it will now become the number one bank in the Philippines,” Diokno told reporters in Malacañang. LandBank, given its larger capitalization and financial position, will be the surviving entity. The consolidated bank will be the largest in the Philippines with assets totaling P4.18 trillion and a deposit base of P3.59 trillion. “The President [Ferdinand Marcos Jr.] expressed the desire to merge the two to make the biggest bank in the country because of the recent financial developments abroad,” Diokno said. “That’s really the best practice. The biggest bank is usually owned by the State,” he added. The Finance department said the merged bank would be better placed to withstand economic shocks. Consolidation is also expected to enhance retail and wholesale banking operations. LandBank currently has 752 branches in total while the DBP has 147. However, only 22 DBP branches will be retained as a result of the merger, which the government wants to finalize before the end of the year. The number of workers to be laid off was not disclosed. The Finance department said “fair separation benefits will be offered for those who will be affected by the merger.” The move is expected to save the government at least P5.3 billion per year or “at least P20 billion” over the next four years, Diokno said. The projected savings are “even understated,” he added, as the amount does not include profits from the sale of redundant DBP assets such as its head office in Makati, a property in Bonifacio Global City in Taguig City, several branches, and equipment and licenses. Diokno also rejected talk that the merger was aimed at pushing through with the controversial Maharlika Investment Fund. Both banks are supposed to provide seed money for the sovereign wealth fund, which critics claim could lead to increased corruption. “There is absolutely no link between the merger of LBP and DBP and the Maharlika Investment Fund,” Diokno said, pointing out that the proposal was previously raised during the term of President Benigno “Noynoy” Aquino 3rd. “The late president Noy Aquino signed an EO (executive order) merging LBP and DBP during his term but [this] was not implemented,” he added. Aquino’s successor, President Rodrigo Duterte, junked the EO on the grounds that the state-owned lenders were created for different purposes. Duterte instead ordered LandBank to be merged with United Coconut Planters Bank. The plan was revived “due to recent financial developments abroad,” Diokno said. Marcos had expressed concern that merging the two banks would mean a loss of services but the Finance chief said “we assured him that ... because both the LandBank and DBP are universal banks, they do almost the same [things] ... except that one is focused on agri, the other one on industrial projects.” In a separate statement, the DBP said there was no formal decision yet on the merger, which it added would “require an act of Congress as both institutions were created by enabling laws.” “The DBP echoes and shares the sentiments of President Ferdinand Marcos Jr. on the need to conduct a thorough and meticulous legal study on the proposed merger of DBP and LBP which he firmly declared during a meeting with all stakeholders in Malacañang today, March 28, 2023,” the DBP said.