DBP & Landbank to Merge

Just got a news update from the (Dept Of Finance Philippines via a YT video clip) that both the DBP & Landbank of the Philippines will be merged w.i.e into a single entity which is expected to be completed by year end. Not too sure of the ramifications; but just wanted to give all expats here a heads up. Stay safe.
-@manwonder

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Thanks for the heads-up Manwonder.

So in the Philippines, LANDBANK will become the main bank?

And government owned. Hmm that's ok when their's no corruption.

Anyway, here's the current Marcos government's media announcement ..

https://pia.gov.ph/news/2023/04/03/marcos-admin-pursues-landbank-dbp-merger

QUEZON CITY, (PIA) -- The government of President Ferdinand Marcos Jr. is proposing to marry two state-controlled lenders, the Land Bank of the Philippines (LANDBANK) and the Development Bank of the Philippines (DBP).

The merger is expected to serve the country’s development needs better by creating a bigger, stronger, and more resilient bank.

If the plan pursues, it will create the country’s largest banking entity carrying an estimated asset of around P4.18 trillion and a deposit base of P3.59 trillion, with LANDBANK as the surviving entity because of its stronger financial position and its P800 billion authorized capital stock.

During a press briefing with the Malacañang Press Corps on March 28, Finance Secretary Benjamin Diokno said, “By merging the two, it will now become the number one bank in the Philippines ahead of Banco de Oro in terms of assets.”

Currently, LANDBANK has 752 branches across the country while DBP has 147 branches. The combined branches will present a wider network for banking operations but it was clarified that only 22 DBP branches will be retained after the merger. Meanwhile, those who will be affected by the merger will be offered fair separation benefits.

According to Secretary Diokno, the merger will eliminate redundancy and inefficiency in operations which will result in government savings. The projected operating cost savings due to the planned merger could reach at least P5.3 billion each year or at least P20 billion in the next four years.

Diokno guaranteed to the public that the services provided by LANDBANK and DBP will continue after the merger. As a matter of fact, lower interest rates can be expected once the merger happened.

Part of the government plan is to put up LANDBANK branches in all local government units (LGUs) throughout the Philippines, which could be a combination of light branches or big branches and automated teller machines (ATMs).

It was during the presidency of Gloria Arroyo that the idea of a merger between DBP and LANDBANK started.

The Bangko Sentral ng Pilipinas was said to encourage the initiative “in anticipation of the wave of foreign banks that may enter the Philippine market upon the occurrence of ASEAN integration

During President Benigno S. C. Aquino III’s term, in February 2016, he signed and issued Executive Order (EO) No. 198 to merge LANDBANK and DBP, with LANDBANK as the surviving entity. The House of Representatives approved this proposal but the Senate disapproved.

Meanwhile, during former President Rodrigo Duterte’s administration, the Governance Commission for GOCCs (GCG) in an en banc resolution resolved to cancel the implementation of Executive Order No. 198. The then Finance Secretary Carlos Dominguez III thumbed down the planned LANDBANK-DBP merger as it would not serve the public interest to transform the two institutions into one, given their different functions. Duterte instead issued Executive Order No. 142 ordering Landbank and UCPB to enter into a merger.

When LANDBANK and DBP finally merge, it is perceived that an efficiency that is beneficial to the government-corporate sector will develop. Before the year ends, the government is planning to make the merger happen. (ARB, PIA-CPSD)

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And then .. here's good old Rappler's opinion ..

"Landbank-DBP merger: Bigger not necessarily better"

APR 2nd 2023, 9:30 AM PHT  LEONARDO Q. MONTEMAYOR, PABLITO M. VILLEGAS, & ROMEO C. ROYANDOYANhttps://www.rappler.com/voices/thought-leaders/opinion-landbank-dbp-merger-bigger-not-necessarily-better/

"Left unaddressed, concerns about the planned merger may morph into social discontent and increased impoverishment of farmers and fisherfolk who already have little or no access to credit, technology, and markets"

Finance Secretary Benjamin Diokno announced recently the planned merger of the state-owned Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP).

He declared that the merged institution would become the country’s biggest universal bank, save the national government P5.3 billion yearly, and improve services to its clients.

Farmers, bank employees, and other stakeholders are seriously concerned about this decision, which came about without any public consultations. 

LBP and DBP were created under separate laws.

They were mandated – under their respective charters – to perform specific missions to achieve balanced national socioeconomic and agro-industrial development. 

LBP was to serve as the main financing institution for agrarian reform beneficiaries and other agriculture stakeholders (including micro, small, and medium enterprises).  If successful, it would help liberate them from food insecurity and poverty. 

DBP was supposed to focus on development-oriented investments (in areas like infrastructure, energy, power generation, telecommunications, and digitalization) and participate in “public-private partnership” business modalities that are normally shunned by private commercial banks.   

The main rationale of the planned merger appears to be “bigger is better.”

But our question is: better for whom?   

Over the years, small farmers and agriculture businesses have reported that, ever since LBP became a universal bank, its commercial operations have dwarfed its loans to small farmers and rural entrepreneurs.

Many of them complain of great difficulty in accessing LBP’s services. They are unconvinced that the merger – with LBP as the dominant entity – will make a major difference for them.

Straying from mandate

Our small farmers and fishers therefore stress that any new legislation should return these banks to their original mandates. As stated earlier, LBP has strayed far from its principal task of servicing small agricultural producers. Merged or not, it will be hard pressed to deliver on the current administration’s goals of food security, farmers’ prosperity, and poverty reduction. 

Secretary Diokno should be reminded further that cost-effective and more efficient bank operations should be realized without neglecting or deprioritizing the mandates of LBP and DBP.  Also, cost savings can be a function of improved management – even without the merger. They need not entail the laying off of employees.

Instead, management should concentrate on retooling or retraining them and removing the excess fat at the head and regional offices. The latter should be reassigned at the grassroots and countryside, where their financial and technical services are critically needed.

There will be disgruntled bank staff with no padrinos to protect them from losing their jobs. Thus, the planned merger may create more disunity and disenfranchisements.

Moreover, such a merger will need legislation by Congress to amend the existing charters of both banks and to establish a new one for the merged institution. All these will cause uncertainties, delays, and other unwanted consequences in the operations of LBP and DBP.

Left unaddressed, these concerns may morph into social discontent and increased impoverishment of farmers and fisherfolk who – with little or no access to credit, technology, and markets – are further caught in the unmitigated cost-price squeeze in an uneven economic playing field. – Rappler.com

Leonardo Q. Montemayor is board chairman of the Federation of Free Farmers, and a former secretary of agriculture. Pablito M. Villegas is owner-operator of the Villegas Organic and Eco-Tourism Farm in Malvar, Batangas. He is a former senior executive of the Land Bank of the Philippines. Romeo C. Royandoyan is executive director of Centro Saka.

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