Gov't abandons LandBank-DBP merger

Plans to merge state-owned Land Bank of the Philippines and Development Bank of the Philippines have been abandoned by the oversight body for government-owned or -controlled corporations (GOCCs).

In an en band resolution, the Governance Commission for GOCCs (GCG) canceled Executive Order No. 198 issued by then-President Benigno Aquino III earlier this year green-lighting the DBP-LandBank merger.
 
In a statement on Tuesday, Department of Finance spokesperson Paola Alvarez noted the en banc resolution was signed by GCG Chairman Jaime Ma. Flores III and Commissioners Michael Cloribel and Samuel Dagpin Jr.

Finance Secretary Carlos Dominguez III and Budget Secretary Benjamin Diokno, as ex-officio members of the GCG, also signed the resolution.

Dominguez earlier said he was thumbing down the planned merger as it would not serve the public interest to transform the two institutions into one, given their different functions.

LandBank serves the agriculture sector while DBP takes care of the needs of industry, he said. “Both were created for different purposes, I don’t see any rational reason to put them together.”

Dominguez noted the merger cannot be done without a law passed by Congress.

Aquino has claimed that the GCG has the power to merge state firms without congressional approval.
 
Dominguez pointed the two banks were set up via legislation, saying the merger could only be considered legal through legislation.
 
He noted DBP was mandated to provide long-term financing which requires bankers with markedly different skills set than those needed to extend short-term credit to farmers – LandBank's primary job.

On February 4, Aquino issued EO 198 – providing for the merger, with LandBank as the surviving entity becoming the country’s second largest bank in terms of assets.
 
According to EO 198, the merger was subject to the consent of the Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corp. (PDIC)
 
Dominguez said, however, that “being number one or number two doesn’t matter.” More important was for the banks to perform their respective functions efficiently, with service to the public the top priority. 

Following its recommendation, the GCG will send President Duterte a memorandum informing him about the resolution to abandon the merger. — Ted Cordero/VDS, GMA News