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Solon eyes re-filing LBP, DBP merger bill | Jovee Marie de la Cruz

ANG Probinsyano Rep. Alfred C. Delos Santos announced last Wednesday that lawmakers should be reminded of an 8-year-old bill on the merger of the Development Bank of the Philippines (DBP) and the Land Bank of the Philippines (LBP).

The 19th Congress has one pending bill filed so far on the merger of the two state-run lenders, House Bill (HB) 7685, filed by Rep. Gustavo “Gus” S. Tambunting last March 23.

“Looking at the House records, the last time such a bill, HB 5755, made its way through the House of the Philippines was in the 16th Congress when the House approved it on third and final reading and sent it to the Senate on May 28, 2015,” said Delos Santos was quoted in a statement as saying. “That was about eight years ago.”

“During the summer recess of Congress, I will study the possibility of either filing my own new bill merging the Land Bank and the Development Bank of the Philippines or I can simply re-file HB 5755,” he added.

The Governance Commission for Government-owned and -Controlled Corporations (GCG) has committed to promptly submit to the Office of the President its recommendation regarding the proposed merger of the state-run lenders.

The agency noted President Ferdinand R. Marcos Jr.’s concern that should the two banks’ merger proceed, such must not result in the abandonment of any of the mandates of the two banks.

Moreover, Delos Santos added that he “will have to consider the various banking, financial and corporation laws that took effect in the eight years since 2015, when the House sent HB 5755 to the Senate.”

He said he will also review the annual reports, Commission on Audit reports and performance reports about the DBP and Land Bank since 2015.

Proper to consult

ACCORDING to Delos Santos, he would “also note that the last time the DBP Charter was amended was in February 1998 by Republic Act  8523, while RA 10374 extended Land Bank’s corporate life by 50 years from the expiration of its original term of August 8, 2013, renewable for another 50 years,” he said.

“It is also proper to consult both [LBP] and DBP on the proposed HB 7685 that seeks to merge them,” Delos Santos added.

If there is a compelling need to merge LBP and DBP, the more efficient way would be to simply authorize by law the governing boards of the two banks to merge their two banks—the same way that private banks do mergers, said the lawmaker.

Meanwhile, Delos Santos said lawmakers are also awaiting the guidance of Speaker Ferdinand Martin G. Romualdez on how best to approach the LBP-DBP merger.

According to the Department of Finance, the consolidated bank will establish its position as the largest bank in the Philippines with an estimated asset size of about P4.18 trillion and a deposit base amounting to P3.59 trillion.

After the merger, the LBP will be the surviving entity given its higher authorized capital stock of P800 billion and stronger financial position.

Withstand shocks

THE consolidated books will allow the merged entity to better withstand economic shocks. The merger will also enhance retail and wholesale banking operations than when functioning as separate banks.

To date, the LBP has a total of 752 branches while the DBP has 147. The combined branches of both banks will result in a wider network for banking operations. However, only 22 branches of the DBP will be retained as a result of the merger.

But Senator Imee R. Marcos earlier said there is a need to “first clarify the procedure to be undertaken for the merger of the two state banks and be guaranteed that the surviving entity will adequately serve the functions of both LBP and DBP.”

LBP was formed under RA 3844 in 1963, while the DBP, originally called the Rehabilitation Finance Corp., was created under RA 85. These, Marcos noted, mean “two different laws with differing powers and functions.”

DBP has the primary purpose of providing banking services for SMEs in the agricultural and industrial sector while the LBP’s purpose is to finance the acquisition and distribution of agricultural estates for division and resale to small landholders as well as the purchase of landholdings by agricultural lessees.

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