The oversight body for government-owned or -controlled corporations (GOCCs) has abandoned a plan by the previous administration to merge the Land Bank of the Philippines (LandBank) and the Development Bank of the Philippines (DBP).
In an en banc resolution, the Governance Commission for GOCCs (GCG) resolved to cancel the implementation of Executive Order No. 198 issued by then-President Aquino earlier this year that green-lighted the DBP-LandBank merger, Finance Department spokesperson Paola Alvarez said.
The en banc resolution was signed by GCG chairman Jaime Ma. Flores III and Commissioners Michael Cloribel and Samuel Dagpin Jr.
Finance Secretary Carlos Dominguez III and Budget Secretary Benjamin Diokno, who both sit as ex-officio members of the GCG, also signed the resolution.
Following its recommendation, the GCG will send a memorandum to President Duterte informing him about its en banc resolution to abandon the LandBank-DBPmerger, according to Alvarez.
Dominguez earlier said he was thumbing down the planned LandBank-DBP merger as it would not serve the public interest to transform the two institutions into one, given their different functions.
He noted that the Land Bank serves the agriculture sector, while the DBP takes care of the needs of industry.
“Both were created for different purposes, I don’t see any rational reason to put them together,” said Dominguez as he pointed out that the merger of the two state-owned banks cannot be done without a law passed by Congress.
The DBP, he said, is mandated to provide long-term financing, which requires bankers with markedly different sets of skills than those needed to extend short-term credit to farmers—the LandBank’s primary job.
Then-President Aquino issued EO 198 last February 4 providing for the merger, with the LandBank as the surviving entity and becoming the country’s second largest bank in terms of assets.
EO 198 stated that the merger was subject to the consent of the Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corp. (PDIC)
Dominguez, said, however, that “being number one or number two doesn’t matter” because what is important is for the two banks to perform their respective functions efficiently, with service to the public their top priority.
Mr. Aquino claimed that the GCG had the power to merge state firms, like the DBP and LandBank, without seeking prior approval from the Congress.
But Dominguez asserted that the two banks were set up through legislation, and, thus, only a law could legalize their merger.
LandBank was created in 1963 through Republic Act 3844, while the DBP was originally named the Rehabilitation Finance Corporation under RA 85.
