HEARD IT THROUGH THE GRIPEVINE: OUR NEW ABNORMAL
As talks swirl about a plan to merge our two state-owned lending institutions, the Land Bank and the Development Bank of the Philippines (DBP), it may make sense to first appreciate that this is a “revival” of an old tune — one that’s brought out of the freezer, and thawed out periodically. The last time was in February 2016, when the late President Aquino issued EO 198, with Land Bank as the intended surviving entity — and the plan was to make the merged entity the country’s second largest bank in terms of assets.
Later that year in June, when the Duterte administration rolled in, the Governance Commission for GOCC’s cancelled the implementation — with both Finance Secretary Carlos Dominguez III and Budget Secretary Benjamin Diokno signing the resolution that put an end to the EO being carried out. Of special interest is that in March of 2016, then Senator Bongbong Marcos expressed his opposition to the merger, saying that the merger would further prejudice the farming sector — depriving farmers of an agricultural bank mandated to serve their needs.
DO WE really need a DBP-Land Bank merger?
Fast forward to today, and once again, in the name of “optimization,” with a stress on asset amalgamation, talk of this merger has resurfaced in earnest. Now, I’m far from being some financial expert; but from where I’m sitting, it would seem that size, number of branches, and asset count — those all make sense when one is a private bank, where market dominance is aimed for, and it comes with scale.
As government institutions with specific mandates, where the priority should be the most effective and efficient manner of performing and delivering on this mandate, on their respective public service missions — of what purpose will this merger serve? For me, this is a case where consolidation and merging will only result in a dilution of the delivery of any of the distinct mandates.
Rather, I’d recommend that they look at each of their mandates, and see how they can improve on, and expand in direct relation to, their respective mandates. There is clearly enough differentiation between the two banks for this to happen, and be of benefit to more. And where there presently is some overlap, find the ways to minimize, if not outright eliminate, said overlap. To highlight the overlap and call for the merger is to ignore the more telling differentiation that exists, or can exist, if all was rationalized.
MY VIEW at the very interesting DTI-led Creative Industries Summit, held last week at the PICC.
I recently attended the DTI-led 2nd Philippine Creative Industries Summit at the PICC, a collaboration with the NCCA and the British Council. There was a nagging question left in the back of my mind as I listened to the speakers and panels talk of how countries like Scotland and Ireland implemented long term plans for stepping-up their creative industries, and making significant contributions to their respective economies. My question was who was going to fund these start-up’s, give them an opportunity to scale up their expertise and operations, so they could credibly compete on the global stage as outsourced partners.
For me, the obvious answer was the DBP. If the DBP was to more clearly define its role in our national recovery, I would like to see them become more focused on urban-centric MSME’s, on tech start-up’s, on enterprises connected to the creative industries. They could also prioritize projects that have to do with Renewable Energy (RE), working for sustainability from this angle. The DBP is perfectly poised to be the venture capital for these types of businesses, and complement their existing portfolio. And it’s clearly evident how concentrating on these type of businesses would not overlap with that of Land Bank’s mandate.
In the case of the Land Bank, countryside development, agriculture and aquaculture-related businesses, farmers and cooperatives – these could all continue to be the core of the Land Bank’s lending activities. With food security such an important aspect of our immediate future, I’m sure we don’t need any dilution or blurring of what Land Bank should be involved in. The circular economy we strive for, as it relates to a rural start, is so essential for reviving our agriculture sector. And I would like to see a state-owned bank making this it’s clear priority. That our President is also the Secretary for Agriculture is proof positive of how important this is.
I may just be your regular man-in-the-street, with a facile knowledge of the two banks and what they each represent; but I can see how the DBP and Land Bank can be of better service by staying separate. They both need to evolve, but the paths to their prospective success are paths they need to forge as distinct institutions.