MANILA — The House Committee on Banks and Financial Intermediaries approved a measure authorizing the merger of the Development Bank of the Philippines (DBP) and the Land Bank of the Philippines (LBP) with the latter as the surviving entity.
Panel chairman and Batangas Rep. Nelson Collantes said that members of the committee have unanimously approved the consolidated bill which substituted House Bills 5350 and 5428.
Collantes, principal author of the bill said that the merger seeks to strengthen the two banks financial capabilities, improve the delivery of services, achieve economic efficiency and better support the development thrust of the government.
He said although DBP and LBP have different mandates under their respective charters, they have similar authority to engage in universal banking activities.
“The fusion of the universal banking activities of the two banks is, therefore, expected to result in the economies of scale of banking operations. Said merger will improve the balance sheet capabilities of the merged bank, thus resulting in a stronger bank which will have a competitive edge over other banks not only in the domestic and global markets,” Collantes explained.
The lawmaker said the consolidated entity would be more effective, efficient and sustainable in carrying out the mandates of both banks, particularly in anticipation of the wave of foreign banks that may enter the Philippine market upon the ASEAN integration in 2015.
Under the bill, in addition to the powers of LBP under the RA 3844, as amended, the LBP as the surviving entity shall also exercise the powers and privileges of DBP under its 1986 Revised Charter and other applicable laws or regulations.
“All assets and liabilities of DBP are hereby transferred to LBP,” it said.
The bill said that the affairs and business of LBP shall be directed and its property managed and preserved by a board of directors consisting of 15 members with Secretary of Finance, as chairman, and the Secretary of Agrarian Reform, the Secretary of Labor, the secretary of Agriculture as ex-officio directors.
The four ex-officio directors may designate their respective alternates who shall be the officials next-in rank to them and whose acts shall be considered the acts of their principals pursuant to the policies and regulations of the Governance Commission.
The 11 appointive directors shall be appointed by the President of the Philippines from a shortlist prepared by the Governance Commission in accordance with RA 10149 or the GOCC Governance Act of 2011.
The measure said that the merger shall provide for a Merger Incentive Program to be offered to affected personnel or those who opt to retire or be separated from service, subject to the approval of the governance commission.