PRESIDENT Ferdinand “Bongbong” Marcos Jr. has approved the proposed merger of the Development Bank of the Philippines (DBP) and Landbank of the Philippines (Landbank) in line with his administration’s thrust toward financial efficiency among state-owned banks, Finance Secretary Benjamin Diokno said on Tuesday, March 28, 2023.
In a press conference, Diokno said the merger is advantageous in terms of operating cost savings, which could reach at least P5.3 billion each year, or at least P20 billion in the next four years.
He said it may also result in lower interest rates of the state-run lenders.
“The President expressed the desire to merge the two to make it the biggest bank in the country because of the recent financial developments abroad. And that’s really the best practice, the biggest bank usually is owned by the state globally,” he said.
“He expressed concern that in the process of merging, that none of the services provided by either bank will be lost and we assured him that with the merger -- because both the Landbank and DBP are universal banks, they do almost the same, right, except that one is focused on agri, the other one on industrial projects,” he added.
Diokno said among the advantages of the merger are:
* Create a bigger and stronger bank to better serve the country’s development needs
* The combined branches of the two banks will result in a wider network of its banking operations.
* The merged bank will become the largest bank in the Philippines in terms of assets and deposit size.
* The merger will eliminate redundancy and inefficiency in operations.
* Projected operating costs savings due to the merger could reach at least P5.3 billion per year, or more than P20 billion over the next four years. This is a conservative estimate.
* The merger complements the strengths and addresses the weaknesses of the two banks.
* The improved financial position will provide bigger headroom for loans that can be utilized for development projects.
* The merger will help avoid the need for DBP to recapitalize — from P30 billion to P100 billion — and seek capital infusion from the national Government
* The merged bank will be in the best position to serve as the sole authorized government depository bank for the entire Philippine government and its instrumentalities.
* Having a single bank remains the best practice in the region and simplified procedures with counterparties.
Diokno said the projected savings are understated because they do not include revenues that can be derived from the sale of redundant DBP assets and various properties such as its Makati head office, BGC property, various branch properties, equipment and licenses, and income that can be derived from the proceeds of such sale.
He said after the merger, only 22 DBP branches out of a total of 147 will be retained.
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).
Although Diokno admitted there would be job losses because of redundancy and reduction in the number of branches if the merger is finally approved, he said employees could opt to retire under the government pension system, or accept a liberal package to be offered by the government.
He said the planned merger could happen before the end of the year. (SunStar Philippines)