Published : Saturday, September 10, 2011 00:00
Written by : Lailany P. Gomez
THE Department of Finance has instructed government financial
institutions to focus lending on underserved sectors shunned by the
private sector.
This after the 53-member Chamber of Thrift Banks complained that
state-owned Land Bank of the Philippines and Development Bank of the
Philippines (DBP) were encroaching into the industry's "niche markets."
Finance Secretary Cesar Purisima said GFIs should "stay out of" what the
universal, commercial and thrift banks are already serving.
He said officers of LandBank, which the DOF secretary chairs, have been
instructed to focus on agrarian reform and agriculture.
"I told them not to compete with what or has already been serviced by
the private sector. Meanwhile, DBP is a conduit of multilateral
companies to provide cheaper source of funding that are available from
other banks," Purisima said on the sidelines of the CTB's general
meeting on Friday.
The DOF chief said the government-owned and -controlled corporation
(GOCC) Commission would look into merging state-owned banks so they
focus more on supporting the country's development.
"Once the GOCC Commission is operational, I think they will have their
hands free to determine if a consolidation of the banks is something
that will be pursued. But I don't want to second guess the commission,
since there are at least 3 parties involved. But once it is in
operation, the law allows it to restructure these banks," Purisima said.
DBP had said it was crafting a feasibility study on a possible merger
with LandBank, but this would still be subject to a "lot of discussions
with the finance department and meetings with Congress."
This merger forms part of the Aquino administration's effort to
streamline the bureaucracy.
Analysts said combining DBP and LandBank would give the government more
leverage in pushing private sector banks to merge, adding that the
combination 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 Bangko Sentral ng Pilipinas has been egging on lenders to merge and
strengthen their balance sheets in preparation for new international
capital adequacy standards.
According to BSP, a healthy financial system should have less than 10
lenders.
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