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By Chino S. Leyco, Reporter
THE planned merger of Land Bank of the
Philippines and Development Bank of the Philippines (DBP) may no
longer push through after it failed to get the imprimatur of the
Department of Finance.
Finance Secretary Margarito B. Teves said the
two state-owned lenders should look for options other than merging,
as their respective charters prohibit them from doing so.
“My suggestion for both LandBank and DBP is
for them to individually present possible amendments to Congress,”
Teves told members of the Chamber of Thrift Banks.
Teves said a more practical approach is to
request for a menu of options from Congress, like allowing the two
lenders to invite investors, including international financial
institutions.
But the finance chief, who also sits on the
boards of both lenders, did not discount the possibility that the
two will merge in the future.
“I don’t think it would be practical to say
that DBP and LandBank will merge because at this point of time that
might not be [the] most feasible and practical way of
consolidation,” he said.
If there is a possibility of consolidation,
Teves said the two should talk to their employees first.
“You have to make sure that they understand
what merger means. Even mergers can be helpful. Timing is very
important. So I think, the bill that will [be] approved by Congress
allows [a] menu of options. [A] merger is one of these options,”
he added.
In terms of assets, loan and deposits, LandBank
ranked fourth in the industry, while DBP is sixth. A merger
therefore may catapult the combined entity to the top three. At
present, the country’s three biggest lenders are Metropolitan Bank
and Trust Co., Banco de Oro Unibank, and Bank of the Philippine
Islands.
LandBank earlier raised a possible merger with
DBP to further strengthen its assets and capital.
Bear Stearns had said combining DBP and LandBank
would give the government more leverage in pushing private sector
banks to merge, adding the merger of the two state-owned lenders
would set an example.
The US-based investment bank said the balance
sheet structures of DBP and LandBank are major consolidation
factors.
LandBank cater to the farming sector, while DBP
is into developmental lending.
The Bangko Sentral ng Pilipinas (BSP) has been
egging on lenders to merge to strengthen their balance sheets in
preparation for new international capital-adequacy standards.
Earlier, the BSP said a healthy financial system should have less
than 10 lenders.
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