The Department of Finance (DOF) is exploring changes to the charters of the Land Bank of the Philippines and the Development Bank of the Philippines (DBP) to pave the way for their potential public listing.

Finance Secretary Ralph G. Recto, speaking at a reception hosted by the Philippine Stock Exchange (PSE) on Thursday, Feb. 22, said that publicly listing the shares of these two state-run banks would enhance the breadth of the local capital market.

“We are exploring the amendments to the charters of the Land Bank of the Philippines and the Development Bank of the Philippines, including their possible public listing, to broaden the local capital market,” Recto said in his speech.

Landbank and DBP rank among the largest banks in the country, boasting a total of P4.07 trillion in assets, P3.59 trillion in deposits, and P1.82 trillion in loans.

Recto told Manila Bulletin last week that informal discussions have been initiated regarding the potential initial public offering (IPO) of Landbank and DBP, following the decision to set aside the planned merger of the two banks.

The finance chief noted, however, that pursuing an IPO for a government-run company would necessitate legislation, but added, "that’s an idea worth considering.”

Meanwhile, Recto is urging the Philippine Stock Exchange (PSE) to work with the government in transforming the country’s capital market as a vehicle for ordinary Filipinos to become shareholders in the nation’s growth.

“Wider public access to investment opportunities and a broad-based financial system are key conditions for achieving inclusive growth,” Recto said.

“With the help of the PSE, I look forward to building the Philippine capital market into a platform where more small companies and wage earners become shareholders. That will be a measure of how much we have dispersed our economic activities and how inclusive our growth has been,” he added.

The PSE is the only stock exchange in the country, a self-regulatory organization that provides and ensures a fair, efficient, transparent, and orderly market for the buying and selling of securities. It also offers a convenient and efficient venue for raising capital to support the growth of businesses.

Recto commended the PSE for staying true to its mandate, serving as the engine financing the growth of the country’s productive enterprises that create more jobs for Filipinos.

In particular, the finance chief lauded the PSE for its proactive capital-raising activities, as evidenced by its efforts to double the number of initial public offerings this year alongside introducing innovations.

These new and diversified innovations include the development of a framework for short selling in the Philippines, allowing for after-hours Volume Weighted Average Price (VWAP) trading, providing retail investors greater access to the stock market through the offering of local stocks via the Gcash and Maya mobile applications, and studying the framework for Derivatives in the market.

Recto particularly praised the PSE for successfully diversifying the stock market by encouraging 10 small companies to list with a total issue size of P29.6 billion.

“All these underscore the remarkable progress our stock exchange has made in democratizing wealth. It is not only benefitting large companies but is making it possible for all Filipinos to become investors, actively contributing to capital aggregation,” he emphasized.

For the DOF’s part, Recto vowed to implement capital market reforms that enhance investor protection, corporate governance, shareholder centrality, and broader investor participation.

The DOF is pushing for the passage of its refined proposal on Package 4 of the Comprehensive Tax Reform Program (CTRP), which aims to harmonize and simplify the tax structure on passive income, financial products, and its transactions to spur greater capital inflow and economic activity.

In addition, the DOF will also pursue the passage of the Capital Market Efficiency Promotion Act which aims to reduce the tax on stock transactions from 0.6% to just 0.1% of stock value.

The Department is likewise supporting the Capital Market Development Act which will address weaknesses of the current private pension system and in the process vigorously develop a dynamic and diversified domestic capital market.

The DOF will also ensure that the Securities and Exchange Commission (SEC) executes swift and efficient approvals on public listings to further encourage the growth of enterprises.