Landbank-DBP merger not pushing through – Recto

The planned legal merger of the Land Bank of the Philippines and the Development Bank of the Philippines (DBP) is no longer pushing through as Finance Secretary Ralph Recto deviates yet again from his predecessor.

On the sidelines of the celebration of the Bureau of Customs (BOC)’s 122nd anniversary yesterday, Recto said the proposed creation of a single state-run financial institution has been scrapped already.

Last year, former finance chief and now Monetary Board member Benjamin Diokno proposed the merger with Land Bank as the surviving entity.

“To me, it’s as simple as I think we need two government depository banks,” Recto told reporters.

“Their mandates are totally different, so I think we’re better off with two of them,” he added.

The merger was originally eyed for Bangko Sentral ng Pilipinas’ approval by the end of last year and for its full completion by the middle of this year.

The consolidation of Landbank and DBP would have effectively created a single government bank, which will be the largest bank in the Philippines.

Combining the two would have resulted in P4.185 trillion in asset size and P3.588 trillion in deposit size.

The DBP, however, vehemently opposed the proposal.

Landbank earlier said that priorities of the two financial institutions would not be diminished in any way, if ever the proposal pushed through.

Now that the merger is off the table, Recto maintained that the government financial institutions’ contribution to the Maharlika Investment Corp. would remain sound.

“They will be okay. If they have dividends this year, then those dividends can be part of retained earnings,” he said.

“It should be used to increase their capital, anyway. I think it will be okay. They will be fine,” he added.