Senate probe sought into proposed Landbank-DBP merger
Credit to Author: Xave Gregorio| Date: Tue, 18 Apr 2023 16:21:00 +0800
MANILA, Philippines — Sen. Risa Hontiveros is calling for a Senate inquiry into the Marcos Jr. administration’s proposed merger of the Land Bank of the Philippines and the Development Bank of the Philippines.
The senator has flagged risks the plan could pose towards the banking system, employees of the state-owned banks and coco levy beneficiaries.
The merger approved by President Ferdinand Marcos Jr. and announced last month is seen to create the largest banking entity in the country, which concerned Hontiveros as she pointed to a 2014 International Monetary Fund study that focused on large banks at the center of the 2007-08 Global Financial Crisis.
“Large banks were found to have lower capital, less-stable funding, more market-based activities, and more organizationally complex than small banks, suggesting a distinct, possibly more fragile, business model,” Hontiveros said in Senate Resolution No. 570.
Still citing the study, she continued: “Large banks created more systemic risk when they engaged in market-based activities or were more organizationally complex, that their failures tended to be more disruptive of the financial system, and that traditional bank regulation—which focused on individual bank risk—may be insufficient for large banks.”
Hontiveros also said the proposed merger endangers the welfare and livelihood of thousands of Landbank and DBP employees as unions from both banks raised that the Marcos administration’s push violated their collective bargaining agreements as they were supposedly not consulted beforehand.
“It is possible that certain jobs will be eliminated or reduced in size. It will negatively affect employee morale and job satisfaction. Changes in leadership, organizational structure, and company culture can create anxiety. Employees should not carry the burden of job uncertainty and financial hardship that will result from this merger,” the lawmaker said.
She also raised the possibility that the merger will “make it even more difficult for the beneficiaries to access support from the fund and will further dilute the mandate of the LBP to assist coco levy beneficiaries.”
She added that the Marcos Jr. administration should not rush the proposed merger and take more time to study it extensively, consult with key stakeholders and resolve legal, operational and personal issues of employees and small coconut farmers.
“By walking fast, employees of the two banks and coco levy beneficiaries may get hurt deeply. Shouldn’t issues like non-payment of benefits or proper turnover be addressed first before another merger pushes through?” Hontiveros said in Filipino.
The Landbank-DBP merger was supposed to take off in 2016, towards the end of the administration of the late President Benigno Aquino III, but the Governance Commission for GOCCs which oversees government-owned or controlled corporations dropped the plan when the administration of former President Rodrigo Duterte stepped into power.
In the past, Marcos Jr. opposed the Aquino-backed merger. When he was gunning for the vice presidency in 2016, then-Senator Marcos said a merger between the two banks would cut much-needed support to farmers, as he believed this move would result in a commercial bank.
The merger is expected to take effect this year, with no definite timelines. — with a report from Ramon Royandoyan