The proposed merger between the Development Bank of the Philippines (DBP) and the Land Bank of the Philippines (LBP) came a step closer to reality as the House Committee on banks and financial intermediaries endorsed las month the bill providing for the consolidation.
House Bill 5755 seeks to rationalize the operations of government agencies and financial institutions with overlapping functions to strengthen their financial capabilities, improve the delivery of services, and achieve economic efficiency.
Under the proposed merger, the LBP will be the surviving entity. As such, Land Bank shall perform all the functions and exercise all the powers and privileges of DBP under its 1986 Revised Charter and other applicable laws or regulations. It shall also take over the assets and liabilities of DBP.
The house committee chair Representative Nelson Collantes explained the measure will “strengthen the balance sheet capabilities of the merged banks and thus improve its competitive edge in the domestic and global markets.”
He added that by fusing both banks’ universal banking functions, the economies of scale of banking operations will be achieved, risks will be diversified and higher lending capacities will be achieved.
“The bill also seeks to enhance the efficiency, effectiveness, and sustainability of the merged entity in anticipation of the wave of foreign banks that may enter the Philippine market upon the occurrence of the ASEAN integration in 2015,” Collantes, one of the principal authors of the measure pointed out.
With DBP having 104 branches and LBP with 337, the combination of branch networks is also expeted translate to a wider geographical reach, benefitting more consumers.
Redundant branches in the same area may be shut down, leading to savings that can be used to open branches where there is none and improve existing ones.
Photo: from www.financepinoy.com