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QUESTIONS & ANSWERS on the APPROVED MERGER OF LAND BANK OF THE PHILIPPINES (LANDBANK) AND DEVELOPMENT BANK OF THE PHILIPPINES (DBP)

POSTED LAST 22 Feb 2016 - 02:13 pm

Q: What is the Governance Commission’s reason for proposing the merger of Landbank and DBP?

A: The consolidation of DBP and LBP is necessary as the functions or purposes of both banks duplicate and/or unnecessarily overlap with one another, which is one of the standards for implementing a merger under R.A. No. 10149.

      Also, the consolidated entity will 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 occurrence of ASEAN integration in 2015.

Q: What are the overlapping functions of these banks?

A: The matrix below shows the overlap between DBP and LBP in terms of their mandate, clientele, and services/products. The highlights are as follows:

       

DBP

LBP

Mandate

To provide banking services principally to cater to the medium and long-term needs of agricultural and industrial enterprises with emphasis on small and medium-scale industries to develop the countryside.

To provide banking service with a social mission of spurring countryside development by granting loans to agricultural, industrial, home-building or home-financing projects and other productive enterprises, farmers  cooperatives/ associations to facilitate production, marketing of crops and acquisition of essential commodities, and to cross-subsidize agrarian land transfers.

Sectors Served

  1. Infrastructure and Logistics
  2. Social Services
  3. Environment
  4. Micro, Small and Medium Enterprises (MSMEs)

 

  1. Small farmers & fisherfolk
  2. Agri and aqua-business (public and private sector)
  3. MSMEs
  4. Communications
  5. Transportation
  6. Housing
  7. Education
  8. Health care
  9. Tourism
  10. Environment-related projects
  11. Utility-related projects

Services/Products

  1. Deposit Products and Cash Services
  2. Trade Products and Services
  3. Center for Global Filipinos
  1. Remittance Products and Services
  2. Reintegration Program for OFWs / MSME Loans
  1. Trust Services
  2. Electronic Banking
  1. Deposit Products
  2. e-Banking Products
  3. OFW Remittance Product
  4. Fund Transfer (Remittance) System
  5. Loans for Cooperatives
  6. Countryside Loan Fund
  7. Treasury Products
  8. Trust Products & Services
  9. Assistance Programs for Landowners
  10. Programs for Countryside Financial Institutions (CFIs)
  11. Technical Assistance & other Programs for Cooperatives

Q: What is the merger’s effect on the banks’ financial base?

A: The consolidated entity will create the 2nd largest universal bank in the country in terms of total assets at P 1.6 trillion. The surviving bank will also be 2nd in terms of deposits at P 1.2 trillion. In terms of loans and capitalization, it will be 4th at P 582 billion and P 114 billion, respectively. Thus, it shall provide a more stable and stronger base for developmental financing.

Level and Industry Rank in terms of Assets, Loans, Deposits, and Capital,

As of 30 September 2015

 

Pre-Merger

Post-Merger

DBP

Landbank

P Billion

Rank

P Billion

Rank

P Billion

Rank

Assets

465.0

7th

1,139.8

4th

1,604.9

2nd

Loans

152.8

9th

429.9

4th

582.8

4th

Deposits

291.4

7th

991.2

3rd

1,282.6

2nd

Capital

36.9

10th

77.2

5th

114.1

4th

Q: What is the significance of the surviving bank having greater lending capacity?

A: The merger will result in a combined single borrower’s limit (SBL) of P 26 billion compared with DBP’s SBL at P 9 billion and Landbank’s at P 17 billion. A higher SBL enables the surviving bank to fund big-ticket infrastructure projects.

Q: How will the surviving bank be able to provide wider access to financial services?

A: More underserved and unbanked areas will be reached by the surviving bank through rationalization of the existing branch networks of DBP and Landbank. Planned branch openings and relocation of branches will expand the reach of the surviving bank to 298 cities and municipalities.

With its wider presence, the surviving bank can offer more financial services to OFWs, SMEs, and the agriculture-agrarian reform sector who are the natural customers of its branch network.

In addition, the surviving bank will have a total of 1,670 ATMs that can also provide access for beneficiaries of the 4Ps program.

Q: What happens to employees of the banks affected by the merger?

A: While no employees will be forced to separate from the bank, they may be reassigned to different locations or jobs. Accordingly, a Merger Incentive Plan (MIP) will be offered to employees who wish to separate from their bank in view of the change in their duties but separation and availment of the MIP will be on a voluntary basis subject to the approval of management.

Q: Which compensation system will the surviving bank follow?

A: The surviving bank will adopt the Compensation and Position Classification System (CPCS) for GOCCs. The surviving bank shall undergo reorganization prior to adoption of the CPCS to align its organization structure to the bank’s strategy in a cost effective manner.

Q: Why is there a need to increase the surviving bank’s Authorized Capital Stock (ACS)?

      A: The higher ACS is necessary to accommodate additional capital requirements in the medium to long term.

 

 

Contact:

Bea Nadine V. Barte

(02) 328 – 2030 to 34

[email protected]

www.gcg.gov.ph