Finance Secretary Benjamin Diokno said Friday he expects the issuance of an executive order this month for the proposed merger of state-run Land Bank of the Philippines and Development Bank of the Philippines.
“Following the approval of the GCG [Governance Commission for Government-Owned or -Controlled Corporations], we now await the issuance of an executive order sometime this month,” Diokno said in a statement.
“There will be a joint crafting and approval of the operational integration plan in September, followed by the approval of the Monetary Board in October, before the final legal merger between LandBank and DBP by November,” he said.
He said the Department of Finance supports the move to consolidate the two banks to create a single government bank. The union of the two banks will make it the largest bank in the Philippines, he said.
“A bigger and stronger government bank will best serve the country’s development objectives. Its consolidated resources will also allow it to withstand shocks arising from financial and economic stress,” he said.
The merged bank will be in the best position to serve as the sole authorized government depository bank for all national government agencies, GOCCs, government instrumentalities and local government units, Diokno said.
“A key strategic benefit of having a single government bank is that it simplifies transactions with counterparty banks, multilateral development banks, and regional development banks. These include the World Bank, Asian Development Bank, and Japan International Cooperation Agency – our biggest partners for infrastructure and social projects,” he said.
The merger aims to achieve synergies that will enhance the efficiency of operations and generate cost savings for the government, he said.
“We estimate that the merger can generate up to P975 million in savings per year through the consolidation of branch operations, on top of the expected reductions in personnel expenses,” he said.
Diok said that pertaining to the retrenchments resulting from the merger, the DoF was determined to work closely with the two banks to ensure that personnel decisions are consistent with the objective to enhance the bank’s efficiency and effectiveness.
He said it is important that those who will be separated receive a fair package of benefits in recognition of their valuable service to the government.
“We do not need a new law to proceed with the merger. The Supreme Court has upheld the constitutionality of the GCG Law, which provides for the powers of the GCG to merge GOCCs with charters,” Diokno said.