February 1 - 15, 2016
PHILIPPINE ASIAN NEWS TODAY
P-Noy OKs Landbank,
DBP merger
President Aquino has
approved the proposed
merger of two stateowned lenders Land Bank
of the Philippines and
Development Bank of the
Philippines (DBP), creating
the country’s second largest
bank with total assets of
P1.604 trillion.
Bangko Sentral ng
Pilipinas Deputy Governor
Nestor Espenilla Jr. said just
like any other merger, the
DBP-Landbank transaction
would be subject to central
bank approval.
“A law or EO will only
serve as legal basis for
government
banks
to
merge. But that said, no
application has been filed
with BSP so far,” he said in
a text message.
In his Executive Order
198, Aquino also approved
the increase in Landbank’s
authorized capital stock from
P25 billion to P200 billion.
Aquino said Landbank, as
the surviving entity of the
merger, requires higher
capital to absorb the
country’s seventh-largest
bank in terms of assets.
“The merger of DBP
and Landbank will build
a stronger and more
competitive
universal
development bank able
to fulfill its mandate of
providing banking services
to
propel
countryside
development
and
to
contribute to sustainable
and inclusive growth,”
Aquino said.
With
the
merger,
Landbank – DBP will be
the second largest bank in
terms of assets, overtaking
Metropolitan Bank and
Trust Co. (Metrobank) with
P1.367 trillion and Bank
of the Philipine Islands
with P1.158 trillion. BDO
Unibank is still the country’s
biggest bank with total
assets of P1.884 trillion.
“The
merger
will
build a stronger universal
development bank with
a solid resource base,
unmatched geographical
reach, a loan portfolio
catering
to
priority
sectors and institutional
knowledge and experience
in development financing,”
said Ma. Angela Ignacio,
commissioner
of
Governance Commission
on GOCCs (GCG).
The GCG, created by
RA 10149, has advocated
for the merger since 2013.
Astro del Castillo,
managing director at First
Grade Holdings Inc., said
the merger is unlikely to
get regulators worried of
the government cornering
higher banking assets.
He said Landbank’s
resulting assets would just
be around 13 percent of
the total Philippine banking
assets of P11.9 trillion as of
September last year.
“I
am
sure
the
regulators will examine the
merger carefully and will
have the necessary tools to
prevent any distress from
happening,” Del Castillo
said in a phone interview.
For the industry, the
merger will have its pros
and cons.
“You
will
have
economies of scale, wider
reach and bigger SBL
(single borrowers limit)
that can contribute to
countrywide development,”
said Lorenzo Tan, president
of the Bankers Association
of the Philippines.
“If not governed and
managed properly, it can be
a ‘too big too fail’ situation,”
he added.
According to a merger
fact sheet, the government
said the merger was
undertaken to remove the
“unnecessary
overlap”
between the DBP and
Landbank’s functions.
In particular, both
lenders have concentrated
their business on providing
credit to the agriculture
B5
BUSINESS NEWS
PNT Foreign Exchange
$1.00 Cdn = P34.03 Php
$1.00 US = P 47.44
€1.00 EUR = P 53.53
₤1.00 GBP = P 68.93
D1.00 BHD= P 125.75
R1.00 SAR = P 12.65
¥1.00 JPY= P 0.42
sector as well as micro,
smalland
mediumenterprises.
Finance
Secretary
Cesar Purisima said the
merger will expand the
reach of both banks, backed
by stronger capitalization
that will help them extend
bigger credits.
As of June 2013, DBP
has 104 branches, while
Landbank has 33 r