Senate probe won’t affect Landbank-DBP merger —Diokno

The proposed merger of Land Bank of the Philippines and Development Bank of the Philippines will carry on despite an impending Senate investigation into the merger’s supposed risks, according to Finance Secretary Benjamin Diokno.

“An investigation does not mean the merger will not push through. As I said, this has the imprimatur of the President,” Diokno told reporters in his weekly press chat.

On Friday, Senator Sherwin Gatchalian filed proposed Senate Resolution 697 aimed at determining the propriety, viability, compliance, and potential effects that the merger might bring to the stability of the country’s banking industry and the economy. 

Senator Risa Hontiveros has filed a similar resolution, as she raised concerns that the surviving entity, which is Landbank, would be “too big to fail.” 

“Any senator can file a resolution, asking for investigation,” Diokno said.

Despite the concerns raised by senators, the Finance chief said the target for the full completion of the merger process—the middle of next year—still stands.

“Dapat by next year accomplished na,” he said.

The proposed merger of Landbank and DBP received the go-signal of President Ferdinand "Bongbong" Marcos Jr. in March, with Diokno later saying that a merger would eliminate redundancy and inefficiency in operations.

The proposed merger will create the largest banking institution in the Philippines with an estimated asset size of about P4.18 trillion, a deposit base amounting to P3.59 trillion, and a capital of P288 billion based on figures as of December 31, 2022.

The merger is expected to generate savings estimated at P5.3 billion a year or at least P20 billion in the next four years.

At the sidelines of the Bangko Sentral ng Pilipinas’ (BSP) reception to the banking community last Friday, Landbank president and CEO Lynette Ortiz said that the state-run lender has no comment on the planned Senate probe on its merger with DBP.

“From Landbank's perspective, we are prepared when it happens. We have a team who is prepared to execute the merger if it happens but as far as whether or not, what legal opinion, whether it needs to go through GCG or Congress, I have nothing to do with that,” Ortiz said.

The Governance Commission for Government-Owned and Controlled Corporations (GCG) has submitted a study to the Office of the President, which stated that the Landbank-DBP merger could proceed without legislation.

Landbank, after its merger with DBP, Ortiz said “will be true to our mandate, to what we are really set out to do.”

“We are a development policy bank and institution so we will be consistent in making sure that there will be no diminution in terms of our priority and objectives,” she said.

During the same event, DBP chairman Dante Tiñga told reporters that the bank stands by its position in opposing the merger.

“I’m not changing our position. We’re totally against the merger,” Tiñga said.

The DBP has sounded the alarm over the merger, saying 3,000 employees, or 75% of its workforce, could lose their jobs, and that the prospect was a "dangerous experiment.”

It also argued that the merger needs an enabling legislation since the two banks were created by acts of Congress.

Tiñga, during the event, said the Office of the President through Executive Secretary Lucas Bersamin is “asking the GCG to submit an extended justifications for the merger.”

The planned merger of Landbank and DBP was first pushed by then-President Benigno Aquino III in 2016 but was abandoned by the Duterte administration due to concerns that this would not serve the public interest because the banks were created for different purposes.

Diokno had said that having a single government bank is the best practice in the region and streamlines procedures with counterpart banks and both regional and multilateral development banks.

“The improved financial position will allow the new entity to lend more for priority projects. With projected operational savings from the merger, it can lend an additional P80.3 billion per year,” the Finance chief said earlier. — BM, GMA Integrated News