DBP-Landbank merger needs no legislation - GCG
Published Apr 17, 2023 06:40 am
The Governance Commission for Government-Owned and -Controlled Corporations (GCG) has ruled that the planned merger of the two state-owned banks requires no approval from Congress.
In a legal study, Alex L. Quiroz, GCG chairperson, said the proposed merger of Land Bank of the Philippines and Development Bank of the Philippines (DBM) can proceed without the need for legislative action.
Quiroz said the GCG ruling was based on "the provisions of statutes and applicable jurisprudence on the matter.”
In particular, he cited the Supreme Court rulings on “Section 5(a) of Republic Act No. 10149 (R.A. 10149) ; Lagman v. Executive Secretary; Section 17, Article VII, 1987 Constitution; and Section 2, Chapter 2, Book III, Administrative Code of 1987.”
"The foregoing legal anchors empower President Ferdinand Marcos Jr. to implement the merger of the state-owned bank without waiting for Congress to file and pass related bills,” Quiroz said.
“Through R.A. 10149, GCG has the power to merge GOCCs which the Supreme Court affirms in its ruling in Lagman v. Executive Secretary,” he added.
“The GCG, pursuant to memorandum Circular 2015-03, has the power to ascertain the manner of the merger—either De Jure Merger or De Facto Merger,” Quiroz pointed out.
GCG’s legal study resolved the issues raised by the DBP and the Department of Finance (DOF) in a sectoral meeting held in the Office of the President.
DBP argued that both government banks were statutorily created and must therefore be merged through legislation while the DOF was of contrary legal position.
Once the proposed merger proceeds, Land Bank, as the surviving entity, would emerge as the country’s largest bank, overtaking Sy-led BDO Unibank Inc.
“The merger will create a bigger and stronger bank to better serve the country’s development needs,” Finance Secretary Benjamin E. Diokno said last March 28. “The combined branches of the two banks results in a wider network of its banking operations.”
Based on the Bangko Sentral ng Pilipinas data, BDO is currently as the country’s leading bank in terms of assets with P3.73 trillion as of September 30, 2022.
The Sy-led bank was followed by Land Bank with assets worth P2.76 trillion, while DBP ranked eighth with P1.035 trillion worth of assets.
“The merger complements the strengths and addresses the weaknesses of the two banks,” Diokno said. “The improved financial position will [also] provide a bigger headroom for loans that can be utilized for development projects.”