The government on Tuesday formally scrapped the previous administration’s plan to merge the two largest state-owned banks.
The Governance Commission for GOCCs issued an en banc resolution canceling the implementation of Executive Order No. 198 issued by former President Benigno Aquino earlier this year that called for the consolidation of Land Bank of the Philippines and Development Bank of the Philippines.
The en banc resolution was signed by GCG chairman Jaime Ma. Flores III and commissioners Michael Cloribel and Samuel Dagpin Jr.
Finance Secretary Carlos Dominguez III and Budget Secretary Benjamin Diokno, who both sit as ex-officio members of GCG, also signed the resolution.
GCG will submit a memorandum to President Duterte informing him about the en banc resolution to abandon the LandBank-DBP merger, according to the Finance Department.
Dominguez earlier opposed the plan, saying it would not serve the public interest to transform the two institutions into one, given their different functions.
He said LandBank served the agriculture sector, while DBP took care of the needs of industries for financing.
“Both were created for different purposes. I don’t see any rational reason to put them together,” said Dominguez. He also said the merger of the two state-owned banks could not be done without a law passed by Congress.
He said DBP was mandated to provide long-term financing while LandBank’s primary job was to extend short-term credit to farmers.
Aquino issued EO 198 on Feb. 4, providing for the merger, with LandBank as the surviving entity and becoming the country’s second largest bank in terms of assets.
EO 198 stated that the merger was subject to the consent of Bangko Sentral ng Pilipinas and Philippine Deposit Insurance Corp.
Dominguez said “being number one or number two doesn’t matter,” because what was important was for the two banks to perform their respective functions efficiently.
Aquino earlier claimed that GCG had the power to merge state firms, such as DBP and LandBank, without seeking prior approval from the Congress.
Dominguez argued that the two banks were set up through legislation, and only a law could legalize their merger.
LandBank was created in 1963 through Republic Act 3844, while the DBP was originally named the Rehabilitation Finance Corporation under RA 85.