The Duterte administration finally aborted the planned merger of state-owned lenders Land Bank of the Philippines (LandBank) and Development Bank of the Philippines (DBP), the Department of Finance (DOF) announced on Tuesday.
In an en banc resolution, the Governance Commission for GOCCs (GCG) resolved to cancel the implementation of Executive Order (EO) 198 issued by then-President Benigno Aquino 3rd earlier this year that green-lighted the DBP-LandBank merger.
The resolution was signed by GCG Chairman Jaime Ma. Flores 3rd and Commissioners Michael Cloribel and Samuel Dagpin Jr. Finance Secretary Carlos Dominguez 3rd and Budget Secretary Benjamin Diokno, who both sit as ex-officio members of the oversight body for government-owned or -controlled corporations (GOCCs), also signed the resolution.
DOF spokesperson Paola Alvarez said the GCG will send President Rodrigo Duterte a memorandum about the latest development surrounding the LandBank-DBP merger.
Dominguez said he was thumbing 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.
He noted that LandBank serves the agriculture sector, while the DBP takes care of the needs of industry.
“Both were created for different purposes, I don’t see any rational reason to put them together,” said Dominguez. He pointed out that the merger cannot be done without a law passed by Congress.
The DBP, he said, is mandated to provide long-term financing, which requires bankers with markedly different sets of skills than those needed to extend short-term credit to farmers—LandBank’s primary job.
Aquino issued EO 198 on February 4 providing for the merger, with LandBank as the surviving entity and becoming the country’s second largest bank in terms of assets.
EO 198 stated the merger was subject to the consent of the Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corp. (PDIC).