DBP-Land Bank merger to take 3 years

Consolidation of both government banks will make them second largest in terms of assets

A REGIONAL official of the Development Bank of the Philippines said a merger with the Land Bank of the Philippines might take effect within the next three years.

This will make the government bank the second largest bank in the country in terms of assets.

DBP Central Visayas Vice President Fernando Lagahit explained that the consolidation, currently proposed under House Bill 5755, was done in line with the liberalization of the country’s banking industry, which forces banks to become more competitive.

‘Necessary’

In addition, the consolidation will also remove the duplication of functions of the two banks.

“The consolidation of DBP and LBP is

Development Bank of the Philippines and Land Bank of the Philippines have 441 branches and P1.35 trillion in assets combined

necessary, as the functions or purposes of both banks duplication and/or unnecessary overlap with one another,” the explanatory note of the bill said.

Landbank and DBP ‘s functions are mostly similar, which include accepting deposits and giving out loans for agriculture, industry, micro, small and medium enterprises, as well as funding environment-related projects.

Larger network

Formal talks of the merger began in Feb. 23, but it was in May that the proposed consolidation received final approval from the House of Representatives.

The surviving entity, according to the bill, will be the Land Bank, given its larger assets and wider branch network.

Upon the merger, the consolidated bank will have a total of 441 branches nationwide, 74 of which are stationed in the Visayas. In addition, the consolidated entity will have P1.35 trillion worth of assets, beating the two giant banks Metrobank and the Bank of the Philippine Islands.

Assets

As of the third quarter of 2014, Land Bank’s assets stood at P911 billion while DBP’s was at P437 billion.

The merger is also expected to make the entity become part of the top 25 banks in Southeast Asia.

Lagahit assured that the services of both banks will be retained amid the consolidation.

However, the bill states there will be some branches that have to be closed once the consolidation pushes through.

Accessibility

“Redundant branches may be closed, which will result in savings that can be used to improve existing ones or open new branches in previously unbanked areas in the interest of inclusive growth, or even improve accessibility in already banked areas for better delivery of services that are normally coursed thru the government financial institutions ,” it said.

Following the House’s approval, the bill will be forwarded to the Senate for another round of discussions. JOG