DBP slashes staff in bid to be gov’t’s main infra bank

The Development Bank of the Philippines (DBP) is undergoing restructuring to make the state-run lender attuned to its role as the government’s main public infrastructure financing arm.

Documents showed that before the Duterte administration stepped down, it set into motion the plan to slash DBP’s staff to 3,624 from 5,241 positions available at present, which will result in massive yearly savings.

“Using as reference the personal services (PS) cost for 5,241 positions amounting to P5.8 billion, the resulting staffing under the restructuring will reduce cost by P698.9 million. However, actual PS cost for total of 3,161 filled positions amounting to P4.5 billion is still lower compared to the P5.1-billion expected cost if staffing under the restructuring will be implemented (filled positions plus critical vacant positions),” read the Governance Commission for Government Owned or Controlled Corporations’ (GCG) memorandum order issued in June.

The order was signed by then GCG Chair Samuel Dagpin Jr., Commissioner Marites Doral, Officer in charge Commissioner Jaypee Abesamis, as well as former Finance Secretary Carlos Dominguez III and ex-budget Officer in charge Tina Rose Marie Canda. Dominguez and Canda had served as ex-officio members of the GCG under former President Rodrigo Duterte.

DBP’s restructuring came on the back of challenges it identified in its operations, such as the need to expand reach, which was made more urgent by the prolonged COVID-19 pandemic; the outbreak of global hacking incidents, which entailed beefing-up information technology (IT) systems; as well as some “disadvantages of being a government financial institution (GFI),” such that “top management have difficulty in steering the company to a common strategy.”

“DBP faces stringent rules and regulations when it comes to disposal of assets, repayments and financing, which leads to higher transaction costs and longer turnaround times,” the GCG noted.

Also, “DBP’s complex and broad mandate allows room for different views and directions (such as corporate banking, development banking, micro, small and medium enterprise, lending and branch expansion),” the GCG said.

According to the GCG, Dominguez’s earlier pronouncements urging DBP to “serve as the infrastructure banks for the ‘Build, Build, Build’ program and to administer the loan administration of the Municipal Development Fund present more revenue opportunities.”

“Stronger social marketing as an infrastructure bank and better leadership stakeholder engagement with key government agencies (such as the Department of Finance, the Department of Trade and Industry, the Department of Public Works and Highways, and the National Economic and Development Authority) may lead to more significant revenue streams or earnings for the company,” the GCG added.

In particular, the restructuring reduced DBP’s corporate services sector, currently employing the biggest number of personnel with 2,417 positions or close to half of total, to only 414. Given the pandemic-induced digitalization challenges and emerging opportunities in infrastructure financing, the restructuring plan added to the DBP for the first time a development and resiliency sector, as well as an information and communications technology sector.

Last February, Dominguez said the next administration may consider merging DBP with a larger bank.

For Dominguez, the new administration may “really have to review the viability of DBP on its own”—a turnaround from the Duterte administration’s previous stance, to the point of stopping the executive order (EO) issued by former President Benigno Aquino III that should have merged DBP and the also state-run Land Bank of the Philippines in 2016.

During the Duterte administration’s first year in office, the GCG cancelled the implementation of Aquino’s Executive Order (EO) No. 198, which should have established the country’s second-biggest bank in terms of assets seen challenging local tycoons’ dominance in the banking sector.

Back then, Dominguez, who oversees GFIs, had 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, Dominguez noted in 2016.

But Dominguez early this year said DBP’s niche in the banking industry may be reviewed moving forward, as the troubles of the dissolved United Coconut Planters Bank (UCPB) was resolved through its merger with Landbank.