Landbank-DBP merger delayed to H1 next year – DOF

MANILA, Philippines — The legal merger between Land Bank of the Philippines and the Development Bank of the Philippines (DBP) will be pushed back to the first half of next year, Finance Secretary Benjamin Diokno said.

In a briefing, Diokno said the creation of a single state-run financial institution would likely happen in the middle of 2024.

This is a slight delay from the original target of end-2023 amid other priority measures being pushed by the Marcos administration.

The Department of Finance last May submitted a draft executive order (EO) on the merger that President Marcos can consider for signing.

“I think it’s going through complete staff work, but we expect that to be approved soon,” Diokno said.

“We feel that by around the fourth quarter, it should be with the BSP (Bangko Sentral ng Pilipinas) already for approval,” he said.

Based on Diokno’s original timeline, the issuance of the EO should have been done in May followed by a joint crafting and approval of the operational integration plan in September.

This will then be approved by the BSP’s Monetary Board in October, before the final legal merger by November.

However, two months have already passed and the merger has yet to progress amid the lack of an EO.

“I think it will be approved by BSP by the end of the year, but that does not end there, like any other merger it has to go through the process,” Diokno said.

“So, probably around the middle of next year will be the full completion. That’s a reasonable timetable.”

In justifying the delay, Diokno noted that the government has a lot on its plate right now, such as the Maharlika Investment Fund and the pension reform of the military and uniformed personnel, among others.

“This government is very active. We have a lot on the agenda, we have many other reforms,” Diokno said.

The consolidation of Landbank and DBP, with the former as the surviving entity, will effectively create a single government bank - the largest bank in the Philippines.

Combining the two will result in an asset size of P4.185 trillion and P3.588 trillion in deposits.

The Finance chief earlier argued that the merged bank would be in the best position to serve as the sole authorized government depository bank for all state agencies and corporations, government instrumentalities and local government units.

Diokno noted that a key strategic benefit of having a single government bank is to simplify transactions with counterpart banks, multilateral development banks and regional development banks.

Likewise, Diokno said the merger aims to achieve synergies that will enhance the efficiency of operations and generate cost savings for the government.

It is estimated 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.