THE DEPARTMENT of Finance (DoF) said state-owned Land Bank of the Philippines (LANDBANK) and Development Bank of the Philippines (DBP) will not have to remit around P15 billion to the government following the issuance of an order slashing their dividend rates on Monday.

Finance Secretary Carlos G. Dominguez III told reporters in a phone message that the two banks do not have to remit dividends amounting to P3.8 billion for DBP and P11.8 billion for LANDBANK out of their 2018 net earnings, pursuant to Executive Order (EO) No. 89 released on Monday.

This is on top of their dividend relief worth P6 billion and P11.1 billion in 2016 and 2017, respectively, Mr. Dominguez added.

EO 89 signed on Aug. 28 reduced the dividend rates of the two state-owned banks to 10% from 50% for LANDBANK’s earnings in 2016 and 2017 and 0% for DBP’s earnings in 2017.

Republic Act No. 7656 mandates all GOCCs to remit at least 50% of their annual net income to the national government, but the Office of the President may adjust the dividend rates “in the interest of economy and general welfare” upon the recommendation of the Finance secretary.

Mr. Dominguez earlier said the adjustments will “improve [the banks’] capital position so they can better fulfill their mandates.”

President Rodrigo R. Duterte had threatened to abolish LANDBANK during his State of the Nation Address in July for allegedly neglecting its role to finance agriculture projects.

In response, LANDBANK said it is the only bank compliant with the Agri-Agra Law which mandates banks to allot at least 10% of their total loanable funds to agrarian reform beneficiaries and 15% for farmers and fisherfolk.

It said its exposure to the agriculture sector as of end-June amounted to P177.32 billion or 22.17% of the bank’s total loan portfolio of P799.64 billion.

LANDBANK said last month that it will increase its loan to the agriculture sector by 20% in 2020 through “intensified efforts.”

Meanwhile, DBP, as the administration’s infrastructure bank, is largely meant to give credit lines for construction projects, including those under the government’s “Build Build Build” program. — B.M. Laforga