By Imee Charlee C. DelavinReporter

Landbank-DBP merger shelved for now

Posted on January 05, 2016

THE PLANNED merger of the Development Bank of the Philippines (DBP) and Land Bank of the Philippines (Landbank) could be halted anew, the chief of the government agency tasked to oversee state corporations said, citing the narrowing time for action left before President Benigno S. C. Aquino III bows out of office.

The Governance Commission for Government-Owned and Controlled Corporations’ (GCG) -- tasked to implement the merger -- said chances the plan will push through are slimming due to lack of time, with the election ban in place come March. Hence, the proposal may have to wait again for the next administration.

“Right now it’s a suspended item, but you never know, the next president might say I want to do it... there’s really not enough time now since magkakaroon na ng election ban (the election ban is upcoming),” GCG Chairman Cesar L. Villanueva said in a recent interview when asked for an update on the move to make a bigger lender that will be a regional contender as Southeast Asian nations integrate.

The GCG executive noted that “it will take about six months for [the government] to do a functional merger.”

“Even the Boards of Landbank and DBP have a term of until June 30... it now depends on the next administration. For this term, baka wala na (it’s unlikely),” Mr. Villanueva added, noting that they are co-terminus with the President.

“We had postponed that... that probably is going to happen in the next administration. There is just not enough time to do that now,” he added.

The planned merger will be affected by the election ban as Section 261 (g) of the Omnibus Election Code forbids “appointment of new employees, creation of new position promotion, or giving salary increases” and “transfer of officers and employees in the civil service” forty-five days before regular elections.

For the May 2016 national polls, the election ban will run from March 25 to May 8, according to the Commission on Elections’ Resolution No. 9981.

Mr. Villanueva said the GCG forwarded a draft executive order (EO) to Malacañang in early 2014 that would authorize the merger without the need for a legislative measure.

“We submitted the draft EO last year. There was an action, actually there was study on like how many will be affected, et cetera. Unfortunately, certain things happened that did not allow the President to go back to it,” he said in an interview late in 2015.

Mr. Villanueva noted the GCG has the authority to push forward with the merger of the two state-run banks, but legislation may be needed to formally establish the joined entity.

“Actually, we don’t need Congress to do it because under our charter, all GOCCs, we can merge them, we have the power through an executive order of the President... We went to Congress in order to get the support of Congress on the things that we cannot do through an EO like having a new charter,” he said.

Lawmakers have said the measure that will merge the two financial institutions -- with Landbank as the surviving entity given its bigger assets and branch network -- may have to wait until the next administration as it still has a long way to go before it secures Senate approval and due to lack of support from the President.

The House of Representatives okayed last May 25 its version of the bill. It has since languished in the Senate awaiting its green light. Senator Sergio R. Osmeña III, head of the Senate committee on banks, financial institutions and currencies, said his committee has set aside further deliberations on the proposal since it could no longer pass at this time and instead focus on other bills in its pipeline.

The proposal in Congress, if passed, is expected to further boost the government financial institutions’ position and put the merged entity among the top 25 banks in the region as members of the Association of Southeast Asian Nations form a single economic community.

A Palace official earlier said the proposal is not among the priorities of the current administration.

“This is not included in the Presidential Legislative Agenda nor with the priority bills of either the Senate and the House of Representatives,” Communications Secretary Herminio B. Coloma Jr. earlier said, quoting a text message from Presidential Legislative Liaison Office (PLLO) Secretary Manuel N. Mamba. Mr. Coloma said the PLLO chief is referring to the “priority bills” of the current administration.

Several attempts were already made in the past to fuse the two state-run banks.