MANILA, Philippines – The previous plan to merge state-run Land Bank of the Philippines (Landbank) and the Development Bank of the Philippines (DBP) has been abandoned, although both banks could be further strengthened through increased capitalization and a possible listing on the Philippine Stock Exchange, according to Finance Secretary Ralph Recto.
“We’ve decided not to merge the two banks. I think even in government, it’s good to have competition, and that’s why we still have both the Landbank and DBP,” Recto said on Tuesday, August 27, during a Senate committee hearing on the proposed 2025 budget of the Department of Finance (DOF).
Instead, Recto said he expects the Senate to approve two bills, which amend the charters of both banks and increase their capitalization, before lawmakers go on break.
Senate Bill 2760, filed by Senate President Francis Escudero on July 30, amends the charter of Landbank and bumps its authorized capital stock up to P1 trillion from the current P200 billion. Senate Bill 2761, also filed by Escudero a day later, provides a new charter for the DBP that would raise its authorized capital stock to P300 billion from the current P35 billion.
This would leave plenty of room for both state banks to raise capital by going public. Both Recto and Landbank head Lynette Ortiz have previously told the media that they may conduct an initial public offering (IPO) following the charter amendments. On Tuesday, the finance chief again told the Senate that passing the bills would pave the way for IPOs.
“The idea is also to increase both their capitalization at the same time to help professionalize it by way of allowing them to raise money from the public and possibly to be the first SOE, or state-owned enterprise, to be listed in the stock exchange,” Recto told the Senate.
Neither Recto nor the two state bank heads mentioned any timeline for a potential public listing.
Merger plans dead in the water
Before Recto took the helm of the finance department, his predecessor Benjamin Diokno pushed hard to have both Landbank and the DBP merged into one “superbank” as early as November 2023.
Diokno, who now sits on the central bank’s Monetary Board, argued that a unified state bank would make a “bigger and stronger bank to better serve the country’s development needs.” A potential merger between the two state banks would have created the largest bank in the country, eclipsing the Sy family’s massive BDO Unibank.
However, merger plans began to stall later in 2023, with the DBP expressing heavy opposition and stating that the merged entity would be “too big to fail, too big to save.”
Diokno later stepped down as finance secretary in January 2024. Since then, the DOF under Recto has shelved all plans for a merger of the state banks.
“I think the previous administration was thinking about it. But this administration, in our discussions, we never considered merging the two,” Recto said on Tuesday. – Rappler.com
