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Manila Bulletin devider Business devider Maharlika may get up to 25% of Landbank, DBP's net worth

Maharlika may get up to 25% of Landbank, DBP's net worth

Published Sep 14, 2023 12:45 am

At A Glance

  • The Land Bank of the Philippines and the Development Bank of the Philippines (DBP) have the potential to invest up to 25% of their net worth in Maharlika Investment Corp. (MIC).<br>National Treasurer Rosalia De Leon said the initial capital of P75 billion from Land Bank and DBP should be considered capital infusions into the Maharlika fund, not investments in the corporation.<br>Land Bank currently has a net worth of around P200 billion, allowing it the option to invest an additional P50 billion in MIC. The same principle applies to DBP, but specific investment amounts were not mentioned.<br>The authorized capital stock of MIC is set at P500 billion, with Land Bank and the national government each contributing P50 billion and DBP adding P25 billion.<br>Other government financial institutions and government-owned and controlled corporations have the option to invest in MIC, subject to their own investment and risk management strategies.<br>Entities involved in providing social security and public health insurance services are prohibited from investing in the fund.

The Bureau of the Treasury said that Land Bank of the Philippines and the Development Bank of the Philippines (DBP) can still invest up to a quarter of their net worth in Maharlika Investment Corp. (MIC).

In a recent interview with reporters, National Treasurer Rosalia V. de Leon said the initial capital of P75 billion from the two state-owned lenders should not be treated as "investments" in MIC. 

De Leon further clarified that the initial funding should be considered as capital infusions into the Maharlika fund, not investments in the corporation.

Land Bank and DBP are allowed to invest up to 25 percent of their net worth in MIC, based on the rules.

Net worth refers to the total value of assets minus liabilities for Land Bank and DBP. It represents the financial standing and wealth of these state-owned banks.

To illustrate, De Leon provided the example that Land Bank currently has a net worth of around P200 billion. This means that the lender has the option of investing an additional P50 billion in MIC if it chooses to do so today.

“The P50 billion coming from Land Bank does not count as an investment in MIC,” the treasurer said. 

The same principle applies to the DBP.

“That has been clarified in the IRR,” De Leon said, referring the implementing rules and regulations that govern Republic Act No. 11954, or the Maharlika Investment Fund Act of 2023.

The authorized capital stock of MIC stands at P500 billion.

Under the law and IRR, Landbank and the national government will each contribute P50 billion, with DBP adding P25 billion, resulting in an initial funding of P125 billion.

Other government financial institutions and government-owned and controlled corporations have the option to invest in MIC, subject to their individual investment and risk management strategies. 

However, it is strictly prohibited for entities involved in providing social security and public health insurance services to invest in the fund.

Related Tags

Maharlika Investment corporation National Treasurer Rosalia V. De Leon
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