Marcos approves merger of Landbank, DBP

Metro Manila (CNN Philippines, March 28) — President Ferdinand Marcos Jr. has approved the proposed merger of LandBank and the Development Bank of the Philippines (DBP) following recent developments in the international banking sector, according to Finance Secretary Benjamin Diokno.

Diokno said the move to merge the two state-run lenders would make them the "biggest bank of the country."

"That's really the best practice. The biggest bank is usually owned by the state, globally," he told a Palace briefing on Tuesday.

"There's a strong need to solidify the government bank. We're not saying that DBP or LandBank has problems… but as policymakers, we need to seek better ways of doing things, especially if we want to improve the performance of particular government agencies," Diokno added.

Aside from the merged bank becoming stronger, Diokno assured the president that the government would save at least ₱20 billion in the first four years of its operations. The estimate was "even understated" as this did not include revenues from the sale of redundant assets of DBP.

Out of the 147 branches of the DBP, only 22 may be retained as a result of the merger, Diokno said. LandBank, meanwhile, has 752 branches nationwide.

"The plan is that LandBank will have a branch in all LGUs in the Philippines. It could be a combination of light branches or big branches, ATMs, etc.," he said.

Asked if there would be layoffs, Diokno said it is a possibility "because there's redundancy."

Since the two state-run banks have respective charters created by separate laws, the merger may require a new law passed by Congress and signed by Marcos.

Concerns over  'super monopoly'

However, Senator Win Gatchalian raised "serious concerns" over the proposed merger, saying it "will create a super monopoly."

The vice chairman of the Senate Committee on Banks, Financial Institutions, and Currencies added that it will be bad especially for local government units (LGUs) that count on loans from the two lenders.

"Lahat ng LGU ngayon isa na lang ang kausap, iyang super monopoly [All LGUs will now have to deal with a super monopoly]," Gatchalian told reporters.

He noted that the two government banks have very different mandates - LandBank focuses on support for the agriculture sector, while DBP aids the country's infrastructure development.

"'Pag sinama natin iyan may masa-sacrifice na mandate diyan," Gatchalian said.

"And even with this separate mandate, hindi nagagawa ng LandBank what it's supposed to do which is to lend out to the agriculture sector. By that alone it tells us na kapag ito isinama, lalong hindi mabibigyan ng attention ang agriculture sector natin," he added.

[Translation: If we put them together, one mandate will be sacrificed. And even with this separate mandate, the Landbank is not able to do what it's supposed to do, which is to lend out to the agriculture sector. By that alone it tells us that if the merger pushes through, the more our agriculture sector will not be given attention.]

The senator said he wants to study the proposal carefully and analyze who will benefit from it.

CNN Philippines' Eimor Santos contributed to this report.