Monday, 29 November 2010 00:00
BY LAILANY P. GOMEZ REPORTER
THE Development Bank of the Philippines (DBP) is crafting a feasibility study on a possible merger with fellow state-owned firm Land Bank of the Philippines. Leonora Fernandez, DBP head of corporate communications, said the Department of Finance (DOF) has asked the lender to submit a position paper for a possible merger scenario of the two government financial institutions.
“But it will still be subject to a lot of discussions with the LandBank and DOF, plus meetings with Congress. Other than that, we can’t say anything at this time,” she said in a text message.
Finance Secretary Cesar Purisima said earlier that economic managers are looking at reviving the proposed merger of the two state-owned banks as part of the streamlining effort of the Aquino administration.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Nestor Espenilla Jr. said in a text message that monetary authorities “have not been formally informed of such plans.”
Rep. Danilo Suarez of the Third District of Quezon had filed House Bill 3258 to merge LandBank and DBP. The bill, however, had been pending before Congress since it was filed early 2008.
Suarez had said in the explanatory note of his bill that the increase in asset and resource base of various commercial banks should be a signal for state-owned lenders to consolidate and beef up their financial positions.
As the bill provides, LandBank and the DBP will be merged, with the former as the larger bank ending up as the surviving entity.
Data from BSP showed that as of June 30 this year, LandBank ranked fourth in the industry in terms of assets, deposits, capital and loans, while DBP ranked sixth, 12th, fifth and ninth, respectively.
A merger therefore may catapult the combined entity to the top three. Banco De Oro Unibank, Metropolitan Bank and Trust Co., and Bank of the Philippine Islands hold the top three positions.
LandBank earlier raised a possible merger with DBP to strengthen its assets and capital.
Analysts had said combining DBP and LandBank would give the government more leverage in pushing private sector banks to merge, adding that the merger of the two state-owned lenders would set an example.
They said the balance sheet structures of DBP and LandBank are major consolidation factors.
LandBank caters to the farming sector, while DBP is into developmental lending.
The central bank has been egging on lenders to merge to strengthen their balance sheets in preparation for new international capital adequacy standards.
According to the BSP, a healthy financial system should have less than 10 lenders.
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CARLOS ANI - SEEDFINANCE Corporation - http://www.seedfinance.net
Email: carlosani@seedfinance.net
Landline: +63495010127 Cellphone: +639152919580
DEVJOBS - http://www.devjobsmail.com
PHILDEVFINANCE - http://phildevfinance.posterous.com http://phildevfinance.wordpress.com
CONSULTING - http://www.carlosani.com
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