Southeast Asia

Mar 25, 2006

Philippines approves merger

MANILA - Philippine President Gloria Macapagal-Arroyo has approved in principle the proposed merger of Land Bank of the Philippines and the Development Bank of the Philippines, resulting in higher capital for the merged bank.

In a roundtable discussion in the presidential palace, Malacanang, the president was joined by Finance Secretary Margarito Teves

and officials from the Land Bank of the Philippines (LBP), Development Bank of the Philippines (DBP), and the National Irrigation Commission.

Teves said the merger would give the government more funds to pump prime the economy through loans to farmers and small entrepreneurs.

"The LandBank board has approved the charter amendment that would allow the bank to merge with DBP or a private bank," he said.

Teves said the merged bank would have a combined capitalization of P40 billion (US$782.5 million) consisting of P22 billion from LandBank and P18 billion from DBP.

He said the merger of DBP and LandBank will be advantageous for both because it will expand their network and allow them to reach their constituency better.

LandBank caters mainly farmers and fisherfolk clients while DBP caters to bigger banks and businesses.

The proposed charter change will also allow the entry of other state-owned banks and private banks as well in the LandBank.

The finance chief is looking at the possibility of getting the nod of Congress by next year before the 2007 elections.

However, he said the government would have to draft a law to amend the charter of the two government-run banks.

(PNA/Asia Pulse)

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