THE merger of the state-owned Land Bank of the Philippines and Development Bank of the Philippines, which the former president Benigno Aquino 3rd had ordered in February this year through Executive Order (EO) 198, is not going to take place.
Ordering such a merger is, first of all, beyond the authority of the executive branch, said the finance secretary, Carlos Dominguez 3rd, when reporters asked him about the long pending merger.
Dominguez also questioned the purpose of the merger since the objectives of the two institutions are different.
For these reasons, the Duterte administration will not implement EO198, he said.
DBP is for providing banking services to small and medium enterprises in the agricultural and industrial sector, particularly those operating in the countryside, while LBP finances acquisitions and distribution of agricultural estates for division and resale to small landholders as well as provide agricultural lessees for purchasing landholdings. It is also the financial intermediary for the comprehensive agrarian reform program.
Considering that the two banks were created for addressing two different kinds of problems—the problem of farmers and the problem of the industry—Dominguez said he was not sure that the merger is going to be in the public interest. “I do not know how you can possibly think that by putting it together you are going to serve the public better,” he added.
The Aquino-issued EO198 had noted overlapping functions of the banks and the need to build a stronger and more competitive universal development bank that is “able to fulfil its mandate of providing banking services to propel countryside development and to contribute to sustainable and inclusive growth.”
Under the merger the assets and liabilities would be moved to LBP whose authorized capital would have increased to P200 billion.
However, although the EO for the merger was issued more than four months before Aquino’s term ended, it has not so far been approved by the Bangko Sentral ng Pilipinas (BSP) and Philippine Deposit Insurance Corp. BSP said that it is waiting for the final decision of the government. “The ball is in their court. We’re just waiting,” said BSP Deputy Governor Nestor Espenilla.
Meanwhile, according to Dominguez, there is a possibility of President Duterte issuing another EO to repeal EO198. “If it has to repealed, then we will repeal it,” he said.