THE full completion of the proposed merger between two state-owned giant banks, Land Bank of the Philippines and Development Bank of the Philippines (DBP), is seen by the middle of 2024, according to Finance Secretary Benjamin Diokno.
In his weekly press chat, Diokno said the Department of Finance (DOF) has already submitted the draft executive order merging the two banks to the Office of the President.
“It’s going through what’s called a CSW [complete staff work]. We expect that to be approved soon,” the Finance chief said.
He said that by the fourth quarter of this year it will reach the Bangko Sentral ng Pilipinas (BSP).
“It has to be approved by BSP. I think it will be approved by the BSP before the end of the year,” he said.
Relating to the acquisition of Citi’s consumer banking business in the Philippines by Union Bank, Diokno said Landbank’s merger with DBP “has to go through a process.”
“So around the middle of next year is the full completion. That’s a reasonable timetable. By the first half of the year,” the Finance chief 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.
Landbank would be the surviving entity and become the largest bank in the country in terms of assets.
Data from the BSP as of Sept. 30, 2022 showed BDO as the country’s top bank in terms of assets with P3.73 trillion.
It was followed by Landbank with assets worth P2.76 trillion. DBP, on the other hand, ranked eighth with P1.035 trillion worth of assets.
Combined with DBP, Landbank will have total assets of about P4 trillion.
Diokno also said that the merger is seen to generate at least P5.3 billion in savings annually or at least P20 billion for the next four years.
Meanwhile, Sen. Risa Hontiveros has aired her misgivings about the proposed merger, saying it would create a bank that was “too big to fail.”
The DBP also 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 said that the merged needs and enabling legislation since the two banks were created by acts of Congress.
But the Governance Commission for Government-Owned and Controlled Corporations (GCG) submitted to the Office of the President its study, which stated that the Landbank-DBP merger could proceed without legislation.
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. (GMA Integrated News)
