NextGen Day

MANILA – Senator Sherwin Gatchalian has called for a Senate inquiry into the proposed merger between the Landbank of the Philippines (LBP) and the Development Bank of the Philippines (DBP), which is expected to be finalized by mid-2024.

Senator Gatchalian emphasized the need for the proposed merger to address the diverse needs of various sectors, including agriculture, infrastructure, and industry, particularly focusing on micro, small, and medium enterprises. He emphasized the importance of ensuring the merger does not dilute the government’s commitment to developing these target sectors.

Furthermore, the Senator raised concerns about potential risks that the consolidation of these banks might bring to the stability of the banking industry and the economy. The merger, if executed, would form the largest bank in the Philippines, potentially concentrating risks and increasing vulnerability to financial market stress and economic shocks.

In line with his concerns, Senator Gatchalian filed Senate Resolution No. 697, seeking to evaluate the propriety, viability, compliance, and potential effects of the merger to aid in crafting necessary legislation.

The government aims to rationalize and centrally monitor the operations of government-owned or controlled corporations (GOCCs) to ensure efficient use of government assets and resources. Finance Secretary Benjamin Diokno previously proposed the LBP-DBP merger to create a more substantial and resilient bank to serve the country’s development needs better.

The proposed merger is expected to form the Philippines’ largest banking institution with an estimated asset size of around PHP4.18 trillion. It aims to eliminate redundancies and inefficiencies, leading to projected annual savings of PHP5.3 billion.

In a report submitted to the Office of the President, the Governance Commission for GOCCs (GCG) affirmed that the proposed merger does not require new legislation. Existing laws already grant the President the authority to implement such a merger. GCG Chairperson Alex Quiroz cited Memorandum Circular 2015-03, emphasizing the commission’s power to determine the manner of the merger, whether officially or practically sanctioned.

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