Marcos exempts DBP from remitting share of 2022 earnings to gov’t

The Development Bank of the Philippines (DBP) will no longer remit to the government a mandated percentage of its 2022 earnings after President Ferdinand Marcos Jr. slashed the state-run lender’s dividend rate to 0%.

The move was meant to strengthen the bank’s capital position and comply with the central bank’s regulations, the Palace said.

In a news release on Friday, the Presidential Communications Office (PCO) said Marcos, through Executive Secretary Lucas Bersamin, issued Executive Order No. 48 on November 28, 2023 containing the new policy.

The EO adjusted the percentage of net earnings to be declared and remitted by DBP for Calendar Year 2022 from 50% to 0%.

Under Republic Act (RA) No. 7656, all government-owned or -controlled corporations (GOCCs) are required to declare and remit 50% of their annual net earnings as cash, stock, or property dividends to the national government.

The same law states that the President, upon the recommendation of the Secretary of Finance, may adjust the percentage of annual net earnings to be declared by a GOCC, “in the interest of national economy and general welfare.”

Last October, Marcos also adjusted Land Bank of the Philippines’ dividend rate to 0% from 50%.

Landbank and DBP have remitted P50 billion and P25 billion, respectively, for the initial capitalization of the Maharlika Investment Fund (MIF).

The two state-run lenders have earlier sought regulatory relief from the Bangko Sentral ng Pilipinas as their respective capital infusions into MIF could render them non-compliant with the minimum capitalization requirements.

Under the BSP’s regulations, universal banks are required to have a minimum capitalization of P3 billion up to P20 billion, depending on the number of branches.

Landbank has an authorized capital stock of P200 billion, while DBP has an authorized capital of P35 billion.

Central bank rules also require banks to maintain a capital adequacy ratio - an indicator of a bank’s ability to meet its obligations - of 10%.

The Palace said Finance Secretary Benjamin Diokno recommended the downward adjustment of the percentage of DBP’s net earnings to be declared as dividends to the national government for 2022 “to strengthen its capital position, comply with the BSP regulations, and augment its role in the provision of crucial resources to priority sectors for the country’s overall socioeconomic development.”

The DBP was created by law to address the medium and long-term needs of agricultural and industrial enterprises, particularly in the countryside, and preferably small and medium-scale enterprises.—LDF, GMA Integrated News