MANILA – The proposed merger of the state-owned Land Bank of the Philippines (Landbank) and the Development Bank of the Philippines (DBP) is expected to result in savings of about PHP5 billion annually for the government.
“For the projected operating cost savings due to the merger, (it) could reach at least PHP5.3 billion per year. So, for the next four years, at least PHP20 billion,” Finance Secretary Benjamin Diokno said in a Palace press briefing on Tuesday.
The figures were presented during the sectoral meeting presided by President Ferdinand R. Marcos Jr. earlier in the day, he said.
Diokno said the projected savings “is even understated” because gains from the sale of DBP’s redundant assets, such as its head office in Makati, a property in Bonifacio Global City in Taguig City, several branches, and equipment and licenses have not been incorporated in the computation.
“Now, the President expressed the desire to merge the two to make it the biggest bank in the country because of the recent financial developments abroad. And that’s really the best practice – the biggest bank usually is owned by the state globally,” he said.
Diokno said because both are universal banks, although Landbank is focused on the agriculture sector and DBP on industrial projects, “they do practically the same.”
“As a result of the merger, there will be savings and the merged banks will be stronger. And in fact, one likely outcome of this is that maybe the interest rate that they will charge will be lower than (the existing rates) either of the two (banks) at the moment,” he added.
Diokno said Landbank is the bigger of the two with branches nationwide numbering about 752 compared to DBP’s 147.
He said they have mapped these branches “and maybe as a result of the merger, only 22 branches of DBP will be retained and that the plan is that Landbank will have a branch in all LGUs (local government units) in the Philippines.”
The merger of the two banks has been raised even in the past administration but did not push through for several reasons, such as their mandates. (PNA)