MANILA, Philippines, March 29 ----- The Marcos Jr. administration gave the go-ahead to merge two state-owned banks, Development Bank of the Philippines and Landbank of the Philippines, despite opposition in the past.
Finance Secretary Benjamin Diokno defended the plan in a noontime Malacañang briefing. The longtime bureaucrat said the merger made sense now, considering the backdrop of financial turmoil roiling the global banking sector these days. “Given what’s happening now, banks closing now, there’s really a strong need for solidifying the government bank,” he said.
The merger came at the intersection of a banking crisis taking shape globally. Tech sector lender Silicon Valley Bank collapsed on March 10 after a bank run, precipitated by exposure to aggressive interest rate hikes undertaken by the US Federal Reserve to combat inflation. The meltdown facilitated the failure of more US-based banks. Outside the US, giants such as Credit Suisse threw in the towel as well. Zooming out, once the merger is complete, it would effectively create the largest banking entity in the country. An exclusive story published by the Philippine Daily Inquirer in early March indicated that the plan would consolidate the assets of DBP and LBP, totaling at least P3.8 trillion.
As it is, the merger was supposed to take off in 2016, towards the waning months of the Aquino administration. The Governance Commission for GOCCs, an oversight body for government-owned or -controlled corporations, dropped the implementation of Executive Order 198 when the previous Duterte administration stepped into power.
Dominguez, sitting in Diokno’s current position, explained that the merger “will not serve the public’s interest” since these two banks had different functions. LBP caters to the needs of the agriculture sector, while the DBP hands out development loans for sector in its capacity as a development bank. Dominguez also countered assertions of the late President Benigno Aquino III that merging these two banks did not need the approval of Congress.
LBP was legislated into existence in 1963 under the Macapagal administration while the DBP was birthed initially as the Rehabilitation Finance Corporation under the Roxas administration.
Source: philstar.com
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