Senate probe into proposed Landbank-DBP merger sought
Published Jul 28, 2023 02:16 am
Senator Sherwin Gatchalian has sought a Senate inquiry into the proposed merger between the Landbank of the Philippines (Landbank) and the Development Bank of the Philippines (DBP) which is likely to be finalized by the middle of 2024.
Sen. Sherwin Gatchalian (Senate PRIB Photo)
In filing Senate Resolution No. 697, Gatchalian said there is a need for the Senate to make an assessment whether the merger of these two government banks would better serve the country’s development needs in the agriculture, infrastructure and industrial sectors, particularly among the micro, small and medium enterprises (MSMEs). It is also necessary to ensure that the proposed merger will not dilute the government’s focus on developing these target sectors. “The Senate also needs to look into concerns on the potential risks the contemplated merger may bring to the stability of the banking industry and the economy, as the consolidation of these banks to form the largest bank in the country could concentrate risks and increase vulnerability to financial market stress and economic shocks,” Gatchalian emphasized in his resolution. Last March, Finance Secretary Benjamin Diokno proposed the merger between Landbank and DBP to create a bigger, stronger, and more resilient bank that can better serve the country’s development needs. Based on a December 31, 2022 study, the proposed merger will create the largest banking institution in the Philippines with an estimated asset size of about P4.18-trillion once implemented. According to the Department of Finance (DOF), this is expected to eliminate redundancies and inefficiency in operations, resulting in savings projected at P5.3-billion yearly. Meanwhile, the Government Commission for GOCCs (GCG), in a report submitted to the Office of the President, affirmed that the proposed merger does not require new legislation and that existing laws had given the President the authority to implement such a merger, according to Gatchalian. The lawmaker, however said, it is imperative for lawmakers to ensure that operations of GOCCs are rationalized and monitored centrally so that government assets and resources are used efficiently.
Sen. Sherwin Gatchalian (Senate PRIB Photo)
In filing Senate Resolution No. 697, Gatchalian said there is a need for the Senate to make an assessment whether the merger of these two government banks would better serve the country’s development needs in the agriculture, infrastructure and industrial sectors, particularly among the micro, small and medium enterprises (MSMEs). It is also necessary to ensure that the proposed merger will not dilute the government’s focus on developing these target sectors. “The Senate also needs to look into concerns on the potential risks the contemplated merger may bring to the stability of the banking industry and the economy, as the consolidation of these banks to form the largest bank in the country could concentrate risks and increase vulnerability to financial market stress and economic shocks,” Gatchalian emphasized in his resolution. Last March, Finance Secretary Benjamin Diokno proposed the merger between Landbank and DBP to create a bigger, stronger, and more resilient bank that can better serve the country’s development needs. Based on a December 31, 2022 study, the proposed merger will create the largest banking institution in the Philippines with an estimated asset size of about P4.18-trillion once implemented. According to the Department of Finance (DOF), this is expected to eliminate redundancies and inefficiency in operations, resulting in savings projected at P5.3-billion yearly. Meanwhile, the Government Commission for GOCCs (GCG), in a report submitted to the Office of the President, affirmed that the proposed merger does not require new legislation and that existing laws had given the President the authority to implement such a merger, according to Gatchalian. The lawmaker, however said, it is imperative for lawmakers to ensure that operations of GOCCs are rationalized and monitored centrally so that government assets and resources are used efficiently.