Land Bank-DBP merger?

has ended and the land reform program has not been satisfactory. LBP is easy to sell and can certainly command a good price. As of December 31, 2014 its Total Asset was billion, Equity Billion, and Net Income Billion. As of June 30, 2015, it has 352 branches and 1,404 ATMs all over the country. A smaller universal coconut bank which has been scheduled for bidding, with less than desirable portfolio, less than desirable reach and network is attracting a good number of investors. Land Bank operated as a universal bank when it was created in 1963 under RA 3844 (Agricultural Land Reform Code.) Its purpose was to finance the acquisition and distribution of agricultural estates for division and resale to small landholders. There is no true land reform in the country today. Thus, LBP did not or could not live up to the purpose for which it was established. Once Land Bank has been privatized, its sale proceeds can help strengthen the Government’s fiscal position, and finance its socioeconomic development programs. As important, there won't be two Government Banks competing for the same deposits, the same loans to an LGU or a Government agency, the same market, the same area, and the same products and services.

2. Keep DBP as the Government Financial Institution (GFI): As a government-owned financial institution or GFI, DBP has the history and culture of a true development bank. It started in 1935 or 80 years ago under the Commonwealth as the National Loan and Investment Board (NLIB), became Agricultural and Industrial Bank (AIB) in 1939, and Rehabilitation and Finance Corporation in 1947 for the post-war reconstruction and development of agriculture, commerce and industry, and properties. RFC was reorganized into what is now DBP in 1958. With recapitalization partly from the proceeds of the sale of Land Bank, once privatized, DBP should continue to be the government’s policy bank. DBP plays a catalytic role in the development of sectors that are critical for inclusive growth such as infrastructure projects; tourism oriented businesses; LGU financial assistance; micro and SMEs in the rural areas, but to which private capital is risk-averse.

It has been tried, tested and proven why our Asian neighbors have progressed faster is the development of policy banks that their governments mandate to finance critical sectors in line with their development agenda. These include the Japan Development Bank, Korea Development Bank, China Development Bank, and sector-specific development banks in Malaysia, India, Thailand, and Indonesia. Why can't we do the same? architbart@gmail.com

*** The author is a retired banker. He at one time served as president of Philippine National Bank before it was privatized.