QUEZON CITY, (PIA) -- The government of President Ferdinand Marcos Jr. is proposing to marry two state-controlled lenders, the Land Bank of the Philippines (LANDBANK) and the Development Bank of the Philippines (DBP). The merger is expected to serve the country’s development needs better by creating a bigger, stronger, and more resilient bank.

If the plan pursues, it will create the country’s largest banking entity carrying an estimated asset of around P4.18 trillion and a deposit base of P3.59 trillion, with LANDBANK as the surviving entity because of its stronger financial position and its P800 billion authorized capital stock.

During a press briefing with the Malacañang Press Corps on March 28, Finance Secretary Benjamin Diokno said, “By merging the two, it will now become the number one bank in the Philippines ahead of Banco de Oro in terms of assets.”

Currently, LANDBANK has 752 branches across the country while DBP has 147 branches. The combined branches will present a wider network for banking operations but it was clarified that only 22 DBP branches will be retained after the merger. Meanwhile, those who will be affected by the merger will be offered fair separation benefits.

According to Secretary Diokno, the merger will eliminate redundancy and inefficiency in operations which will result in government savings. The projected operating cost savings due to the planned merger could reach at least P5.3 billion each year or at least P20 billion in the next four years.

Diokno guaranteed to the public that the services provided by LANDBANK and DBP will continue after the merger. As a matter of fact, lower interest rates can be expected once the merger happened.

Part of the government plan is to put up LANDBANK branches in all local government units (LGUs) throughout the Philippines, which could be a combination of light branches or big branches and automated teller machines (ATMs).

It was during the presidency of Gloria Arroyo that the idea of a merger between DBP and LANDBANK started. The Bangko Sentral ng Pilipinas was said to encourage the initiative “in anticipation of the wave of foreign banks that may enter the Philippine market upon the occurrence of ASEAN integration in 2015.”

During President Benigno S. C. Aquino III’s term, in February 2016, he signed and issued Executive Order (EO) No. 198 to merge LANDBANK and DBP, with LANDBANK as the surviving entity. The House of Representatives approved this proposal but the Senate disapproved.

Meanwhile, during former President Rodrigo Duterte’s administration, the Governance Commission for GOCCs (GCG) in an en banc resolution resolved to cancel the implementation of Executive Order No. 198. The then Finance Secretary Carlos Dominguez III thumbed 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. Duterte instead issued Executive Order No. 142 ordering Landbank and UCPB to enter into a merger.

When LANDBANK and DBP finally merge, it is perceived that an efficiency that is beneficial to the government-corporate sector will develop.

Before the year ends, the government is planning to make the merger happen. (ARB, PIA-CPSD)