President Benigno Aquino III has given his go-ahead for the merger of state-run banks Development Bank of the Philippines (DBP) and Land Bank of the Philippines (LBP)
Executive Order (EO) No. 198 issued on Feb. 4 and published Tuesday said the Governance Commission for GOCCs (GCG) earlier determined that “it is in the best interest of the State to merge DBP and LBP, with the latter as the surviving entity,” noting of the two banks’ overlapping functions.
The EO said the merger “will build a stronger and more competitive universal development bank able to fulfill its mandate of providing banking services to propel countryside development and to contribute to sustainable and inclusive growth.”
The operational merger of DBP and Land Bank through the transfer of assets and liabilities of DBP to LBP is still subject to the written consent of the Philippine Deposit Insurance Corp. as well as Bangko Sentral ng Pilipinas approval, the EO read.
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Following the recommendation of the Department of Finance (DOF), LBP’s capital stock will be increased to P200 billion (from P25 billion).
The EO also directed the DOF as well as the Department of Budget and Management to infuse P30 billion in capital to LBP.
The GCG will implement the merger, including undertaking a reorganization plan, under which personnel of the two banks who will be separated from service shall receive a merger incentive pay on top of separation or retirement benefits.
In a statement, Finance Secretary Cesar V. Purisima said the merger “bodes well for the stability of our banking system.”
“With better capital adequacy and robust resources, we can expect government banking to continue growing, especially in terms of efficiency and size of the public served,” Purisima said. CDG