The merger of government-owned Land Bank of the Philippines (Landbank) and Development Bank of the Philippines (DBP) will push through, Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla said.
“The decision has been made. It must be implemented,” he said in a reply to questions from the Philippine News Agency (PNA) on Monday.
Last week, Finance Secretary Benjamin Diokno said the banks would be legally merged by November this year, with Malacanang expected to issue within this month the Executive Order (EO) for this purpose.
The merger, which has been approved by President Ferdinand R. Marcos Jr., is expected to result in a stronger bank with total assets of around P4.18 trillion, deposit base of about P3.59 trillion, and savings for the government of around P975 million annually.
The savings are seen to come from consolidation of the banks’ branches, with DBP being folded into Landbank given its higher capitalization at around P800 billion, and larger number of branches nationwide.
Meanwhile, a member of the policy-making Monetary Board (MB) favors the planned consolidation of the two government financial institutions (GFIs) after noting that Philippine banks, even the major ones, are smaller compared to their counterparts in some countries in the region.
“Our banks are really small. There’s some rationale for having much larger banks, stronger banks,” MB Bruce Tolentino said over the weekend in the sidelines of the business journalism seminar hosted by the Economic Journalists Association of the Philippines (EJAP) in coordination with San Miguel Corporation (SMC).
In a statement on Monday, DBP said it has a “pending appeal with the Office of the President on the results of the legal study conducted by the Governance Commission for GOCCs (GCG).”
“DBP reiterates GCG’s legal study only delved on the proper mode of merger. It did not discuss the propriety of merger. In fact, based on the GCG’s statements, no recommendation in favor of merger had been given. DBP maintains that the legal authority of the GCG is at best recommendatory and in no way binding on any government agency,” it said.
The DBP said the planned merger “requires Congressional action”, which the GCG earlier said is not needed.
It said the bank “shall zealously exhaust all available means to ensure that all issues and concerns are properly threshed out and effectively addressed in the proper and legal forum.”
“DBP is confident that President R. Marcos Jr. will listen to the clamor of the people and follow the proper and legally-mandated process to protect and advance the welfare of the banking industry and the country in general,” it added.
GCG earlier said it has submitted to the Office of the President results of a legal study on the planned merger, and discounted the need for a legislative action for this to push through.
In a statement, GCG chairperson Justice Alex Quiroz said they “sought answers through the provisions of statutes and applicable jurisprudence on the matter.”
He said results of the study showed that through Republic Act 101499, otherwise known as the GOCC Governance Act of 2011, GCG has the power to merge GOCCs as proven by the Supreme Court affirmation on its ruling on Lagman vs. Executive Secretary.
The proposed merger of the two government-owned banks has been raised since the Aquino administration.
CURRENTPH NEWS SERVICE