LBP-DBP P1.6- T merger will screw up a vital sector


I WISH that the late Basilio Estanislao would rise up from the grave to tell us what the Land Bank of the Philippines was all about. As the banker who presided over the starting years of the Land Bank, he had a mastery of the bank’s mandate, on why Mr. Marcos gave financial muscle to it, on why small farmers rejoiced after the rejuvenated LBP spread up its branches across the countryside.

About the original and real mandate of the LBP, these are the things Mr. Estanislao will tell us:

A bank for the farmers and agrarian reform beneficiaries

A bank by the farmers and agrarian reform beneficiaries

A bank of the farmers and agrarian reform beneficiaries

Simply put, it was a “dedicated”bank. To help the “small”and the “marginal” was the end all and be all of the Land Bank. Its original touch and feel was rural. It smelt of the paddies. The peasant representatives named to the Land Bank board were big men in the Philippine peasant movement, pro-Marcos leaders yes, but still big names in the movement. (Now, they are just political lackeys with no real connection with the small farming movement. The original peasant reps at the LBP were active, not passive, members of the bank’s board.

Mr. Estanislao, we have to stress this point, can’t be mistaken for Jamie Dimon.

As a GFI under Mr. Marcos, the Land Bank – just like PNB and DBP – was not steeled against crony loans and special favors to the vested interests close to the regime. Overall, though, it performed its role as a banker to small farmers and agrarian reform beneficiaries. It forced farmers, who are terribly afraid of places like banks, to enter a bank. You see, there are types of land redistribution that require farmers to pay for the lands transferred to them and the Land Bank is the only entity authorized to accept the small payments.

As Mr. Aquino signed the executive order that forged a P1.6 trillion merger of the Land Bank and the DBP, he announced the merger in glowing terms that would not be recognizable to either Mr. Estanislao or any of the pioneers of the Land Bank management.

Mr. Aquino, according to the newspapers, had this to say about the LBP-DBP merger, which would make the LBP the surviving entity.

“The merger of the DBP and the Land Bank will build a stronger and more competitive universal development bank able to fulfill its mandate of providing banking services to proper countryside development and contribute to sustainable and inclusive growth.”

Even if you were the dumbest of the dumb, you would know what Mr. Aquino’s words mean.

First, the pursuit of bigness will continue. After the BSP regulators had been done looking at the merger and shall have green-lighted it, the Land Bank will use its formidable assets (second largest after to BDO) to do what a universal bank has to do – step up expansion efforts and be less restrained by profit-seeking boundaries.

Universal banks always strive for bragging rights and Land Bank has to maintain its 2nd place among the country’s banks, if not attempt to topple the BDO from its perch.

Second, what the late Mr. Estanislao had set out to do with the original Land Bank, which is to help small farmers and agrarian reform beneficiaries, will now be the last and the least of its priorities. Small farmers and agrarian reform beneficiaries, now getting marginal attention from the present Land Bank, will even get less support. Land Bank, in the future, may even give up its mandate as the depository of agrarian reform payments as it has to focus its efforts on the pursuit of bigness.

From token, the support from Land Bank to its original clients, will soon go down to zero. The merger will see to it that it goes down to zero. This is in sync with the governing mindset of Mr. Aquino – pro big and anti-small.

Already, anything that suggests small farmers, agrarian reform beneficiaries and small-scale agriculture gets the bludgeoning from the Aquino government. After the discovery of the Napoles pork scam, the first order of Mr. Aquino was to stop all the token and meager subsidies to small farmers. from seeds to production assistance. We farmers often say that the Napoles scam was used by Mr. Aquino to display his full bias against the peasantry.

The leadership of the Department of Agriculture (DA) was placed in the hands of Procy Alcala, a former kontratista, and Francis Pangilinan, a former komentarista. True enough, they transformed the DA into a Department of Utter Mediocrity. For all the billions poured into the DA last year, its growth rate was a less than 1 percent. Mr. Aquino thinks Mr. Alcala is the paragon of great leadership.

What has thrived are smugglers of agricultural commodities. A total of 17 smuggling rings allegedly operate at the customs zone and backyard hog raisers like myself have been losing for almost a year due to the brazen smuggling of meat products.

What sector of the overall agricultural sector will benefit from the merger?

Agri-business giants that are basically subsidiaries or sister companies of the huge business conglomerates. Entities that have full access to formal credit in the first place. In short, Mr. Aquino’s favorite and chosen constituency. As in 99 percent of the policy decisions of Mr. Aquino, the merger will only serve the interests of the Top 1 percent and badly screw up the small farmers.


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  1. Leodegardo Pruna on

    While it is true that there are some duplication in the services provided by the merged banks it does not follow that it could serve with the same efficiency the needs of its clientele. This merger was not thoroughly studied and that is understandable with a Chief Executive who has so far not done anything good except in touting his “matuwid na daan”. God bless the Philippines.

  2. Abnoy is interested only of the GDP growth as if it is the only measure of a good governance and of a legacy to be proud of (such is the attitude of a hypocrite landlord) and not of the state of the quality of life of the other constituents who are not majority contributors of such GDP growth because of their neglect by our government, not giving them opportunity to work, or to put up small businesses or to farm their small lands. Maybe this Abnoy leader is being joked now among other successful kind leaders around the world whose style of leadership centers on how to uplift the quality of life of the majority of its constituents.

  3. There were previous caveats from some analysts that mergers can be not good at all time, because if in the future some big companies fail, they may be too big and there may not be enough government or other private money to bail them out. and the failure can trigger a domino effect that their creditor companies may go bankrupt too.