The Duterte administration will not implement the merger of the government’s two largest banks, Finance Secretary Carlos Dominguez III said Thursday.
Dominguez told reporters the executive order issued by former President Benigno Aquino III to consolidate Land Bank of the Philippines and Development Bank of the Philippines would likely be repealed.
“First, we are not going to implement it, that’s number one. If it has to repealed, then we’ll repeal it,” Dominguez said.
Dominguez, who as Finance chief serves as Land Bank chairman, earlier expressed strong opposition to the merger, saying the two banks were established for different purposes.
“We will not implement it, because I really think you can not do it by EO, that’s number one. Number two, I am really not sure that you’re going to be serving the public right because these institutions were put up to address two different kinds of problems—the problem of the farmers and the problem of the industry,” Dominguez said.
The merger of the banks is expected to create a mega bank with total assets of P1.71 trillion, based on end-2015 data, challenging local tycoons’ dominance in the banking sector. The merger would make the surviving entity (Land Bank) the country’s second largest lender in terms of assets.
Under the merger, Land Bank will be the surviving entity. Landbank is the country’s fourth largest bank in terms of assets (P1.14 trillion), while DBP has P465 billion and ranked seventh.
The executive order issued by Aquino stated that the merger would enhance the financing of priority projects and sectors such as infrastructure, public services, agriculture and small and medium enterprises.
“The merger of DBP and LBP will provide better access and extend quality financial services and products to more unbanked and underserved areas,” the EO stated.
The Governance Commission on Government Owned and Controlled Corporations submitted in April to Bangko Sentral ng Pilipinas and Philippines Deposit Insurance Corp. a final business plan of the merger.
Bangko Sentral Deputy Governor Nestor Espenilla told reporters the merger was within the judgment of the Finance Department.
“The ball is on their court. We are waiting [for the applications]. We told them about the requirements but they have not yet returned [with the documents],” Espenilla said.
Bangko Sentral will have the final approval of the merger.