DBP seeks capital buildup of up to P300 B
State-run Development Bank of the Philippines (DBP) is hoping to raise its authorized capital stock to P300 billion as the bank seeks to amend its nearly three-decade-old charter.
In a statement, DBP president and CEO Michael de Jesus said the bank is working with the Department of Finance (DOF) and lawmakers to reform its charter in a bid to cater to the ever-changing market and economic landscape.
As such, the amendments hope to include the increase in DBP’s authorized capital stock to P300 billion, an over 700-percent increase from the current level of P35 billion.
De Jesus said this would enable DBP to expand its credit assistance to priority sectors and widen its menu of financial products and services, as well as finance more developmental projects in the countryside.
“These amendments are needed to boost our financial position and make us responsive to the evolving needs of our clients,” De Jesus said.
DBP’s charter was last amended in 1998, which raised the bank’s authorized capital stock from P5 billion to P35 billion.
Finance Secretary Ralph Recto earlier said the DOF is looking to amend the DBP charter, as well as that of the Land Bank of the Philippines, to broaden the local capital market.
Recto also floated the idea of the possible public listing of the two government financial institutions, a move that DBP also supports.
There are several bills already filed and pending at the House of Representatives. In 2021, the lower chamber approved on final reading a bill that would revise the DBP charter. At the time, DBP was only seeking an increase in its authorized capital stock to P100 billion.
The bank is hoping that a similar version will soon be filed in the Senate.
Further, De Jesus maintained that the amendments would allow DBP to engage in traditional and non-traditional modes of financing businesses, while enhancing its compliance with risk-based banking laws and regulations.
“The new charter would also bolster existing governance mechanisms and provide greater operational and organizational flexibility for us,” De Jesus said.
“It would also grant perpetual corporate existence to the bank while allowing it to declare all of its net earnings as payment of capital subscriptions of the national government,” he said.
DBP is the eighth largest bank in the country in terms of assets. It provides credit support to four strategic sectors of the economy namely, infrastructure and logistics, MSME, environment and social services and community development.
It was originally founded as the Rehabilitation Finance Corp. which was part of mechanisms to jumpstart reconstruction and economic revival after the devastation of World War II.