Gov’t wants LBP-DBP merger finalized by June
The government will fast track the merger of Land Bank of the Philippines and Development Bank of the Philippines in a bid to seal the deal before President Aquino steps down in June.
In a meeting among government agencies involved in the Landbank-DBP merger on Thursday, it was resolved that “the sooner [they] begin [the merger process], the better,” Finance Assistant Secretary Maria Teresa S. Habitan told reporters yesterday. The meeting was convened by Finance Secretary Cesar V. Purisima.
Habitan said the agencies involved would come out with an “integration plan” to facilitate the merger.
She said the merger would no longer need a separate law from Congress. “It is covered by the mandate of the GCG (Governance Commission for Government Owned or Controlled Corporations),” she said.
This will be the first GOCC merger to be facilitated by the GCG.
Under its charter, the GCG recommends to the President the GOCCs for abolition, merger or privatization. It was formed under Republic Act No. 10149 or the GOCC Governance Act of 2011, which mandates the commission “to act as a central advisory, monitoring, and oversight body with authority to formulate, implement and coordinate policies” governing GOCCs, government financial institutions, government corporate entities, as well as government instrumentalities with corporate powers, it said on its website.
Earlier, the President approved the merger of the two state banks, which would create the country’s second largest bank in terms of assets and challenge local tycoons’ dominance in the financial sector.
Landbank will be the surviving entity in the merger, pending Bangko Sentral ng Pilipinas’ (BSP) approval and the consent of Philippine Deposit Insurance Corp.
The merger will result in a bank with combined assets of about P1.6 trillion, just behind Henry Sy-owned BDO Unibank Inc.’s P1.88 trillion and surpassing George Ty-led Metropolitan Bank and Trust Co.’s P1.37 trillion, based on end-September 2015 BSP data.
At present, Landbank is the country’s fourth largest bank in terms of assets (P1.14 trillion), while DBP has P465 billion and ranked seventh.
Executive Order (EO) No. 198 issued on Feb. 4 and published last Tuesday noted that the GCG earlier determined that “it is in the best interest of the state to merge DBP and Landbank,” 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.”
DBP’s assets and liabilities will be transferred to Landbank under the operational merger.
Following the recommendation of the Department of Finance (DOF), Landbank’s authorized capital stock will be increased to P200 billion from P25 billion at present. This significant increase would make the merged entity the largest in the country in terms of capital, the GCG said in a report submitted to Malacañang last year.
In Southeast Asia, the merger would make Landbank one of the region’s top 20 lenders, according to the GCG.
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