By Keith Richard D. Mariano

Dominguez lukewarm to Landbank-DBP merger

Posted on June 06, 2016

THE MERGER of the Land Bank of the Philippines (Landbank) and the Development Bank of the Philippines (DBP) is off the incoming administration’s table.

“I will not stop the merger; I will not do it,” Carlos G. Dominguez, who will serve the incoming administration as Finance secretary, said in a June 3 interview with reporters.

President Benigno S. C. Aquino III approved the merger of the state-owned banks through Executive Order (EO) No. 198 issued Feb. 4, subject to the consent of the Bangko Sentral ng Pilipinas and the Philippine Deposit Insurance Corp.

Mr. Aquino cited the “need to rationalize the operation of government agencies and government financial institutions to strengthen their financial capabilities, improve the delivery of services, achieve economic efficiency and support the development thrust of the government.”

EO 198 directed the Budget and Finance departments to infuse the surviving entity at least P30 billion in capital, using existing funds or allocations in the General Appropriations Act for the succeeding years.

“I am not honoring or dishonoring [the executive order]; I am just saying I don’t think it can be done without legislation,” Mr. Dominguez said, adding the incoming administration will neither propose the merger to Congress.

The Aquino administration had argued otherwise, saying the Governance Commission for Government-owned and -controlled Corporations possesses the power to merge state firms without seeking prior approval from the Congress.

In May 2015, the House of Representatives passed its version of a measure seeking to merge Landbank and DBP. The bill, however, failed to hurdle the Senate.

“First of all, both [were] created for different purposes. I don’t see any rational reason to put them together,” Mr. Dominguez noted.

“One is a development bank tasked to give long-term finance. The skills you need to do that are very different from the skills you need to do short-term finance particularly for farmers,” the next Finance chief added.

Mr. Dominguez further dismissed the possible benefits of creating a bigger state bank through the merger of Landbank and DBP.

“What is it to be number one? It doesn’t matter. If they provide the function, if they do it efficiently, that’s okay...Being number one only matters in boxing,” Mr. Dominguez said.