MANILA – President Ferdinand R. Marcos Jr. is seriously studying the proposed merger of the Landbank of the Philippines (LBP) and the Development Bank of the Philippines (DBP), which is in line with the administration’s thrust toward financial efficiency among state-owned banks, Finance Secretary Benjamin Diokno said on Tuesday.
“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,” Diokno said in a press briefing in Malacañang.
Diokno said Marcos initially expressed concern that merging the two banks would mean that services provided by either bank would be lost.
“We assured him that with the merger—because both the Landbank and DBP are universal banks, they do almost the same, right, except that one is focused on agri, the other one on industrial projects,” Diokno said.
In a separate statement, the DBP said there is no formal decision on the Landbank-DBM 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 statement read.
In 2016, Marcos also opposed the merging, saying it will deprive farmers of an agricultural bank that is mandated to serve their needs.
Diokno, however, said they assured the President that the two banks “do almost the same” and will result in savings of at least PHP5.3 billion per year.
“Given what’s happening now globally, you have banks which are now being closed right? For example, Credit Suisse. Who would have thought Credit Suisse would go under? So, there’s really a strong need for solidifying the government bank,” he said.
“We’re not saying that the current system is broken but as policy-makers, we have to constantly seek better ways of doing things, especially if we want to improve the performance of particular government agencies,” he added.
Diokno said the merger is also consistent with Marcos’ goal to rightsizing the government bureaucracy.
“If we are able to do that successfully, then we’ll have more money for really essential projects like healthcare, education and infrastructure,” he added.
Strengthening financial capabilities
Should the merger push through, Diokno said Landbank would be the surviving entity because it is “at least four times bigger” than DBP.
“Ang advantage nito talaga (The advantage of this) is that we will be able to save a lot of money for the national government… For the projected operating cost savings due to the merger, (these) could reach at least PHP5.3 billion per year. So for the next four years, at least PHP20 billion and this is even understated,” he said.
“This does not include revenues that can be derived from the sale of redundant assets of DBP, various properties such as its head office in Makati, a property in BGC, various branch properties, equipment and licenses and income that can be derived from the proceeds of such sales,” he added.
Diokno said the merger is expected to take effect “before the end of the year.”
Diokno likewise said the merger will cause in some layoffs, but assured that separation packages will be given to the said employees.
“In any reorganization, there will be people who will be affected and that’s why we provide a very liberal separation package. They can use that, they can invest it in new businesses if they want to, or they can live on it. But we are doing this for the greater good,” he said.
In 2016, the Governance Commission for Government-Owned and Controlled Corporations (GCG) cancelled the implementation Executive Order No. 198, which aims to merge Landbank and DBP.
Diokno, who was then Secretary of the Department of Budget and Management (DBM), and DOF Secretary Carlos Dominguez III, both sitting as ex-officio members of the oversight body for Government Owned and Controlled Corporations (GOCCs), also signed the GCG resolution cancelling the EO.
Dominguez earlier said a Landbank-DBP merger “would not serve the public interest to transform the two institutions into one, given their different functions.”
Landbank caters to agriculture, while DBP takes care of industries. (PNA)
