Agri stakeholders say Landbank-DBP merger could hurt farm sector growth
MANILA, Philippines — Agriculture stakeholders slammed the government’s plan to merge state-run lenders Landbank of the Philippines and Development Bank of the Philippines, saying the move could hurt the growth prospects of the long-neglected farm sector.
In a statement on Thursday, the stakeholders said they were “seriously concerned” about the upcoming tie-up which, they pointed out, came about “without any public consultations”.
Landbank would be the surviving entity in the merger.
The statement was released by Pablito Villegas, a former executive of LandBank; Leonardo Montemayor, a former agriculture secretary; and Romeo Royandoyan, executive director of Centro Saka Inc., a non-government organization that focuses on rural development research, among others.
They said the merger could further distract Landbank from doing its mandate of financing farm development. Since the lender became a universal bank, the stakeholders said Landbank’s lending to agriculture stakeholders have been eclipsed by its commercial operations.
"LBP has strayed far from its principal task of servicing small agricultural producers. Merged or not, it will be hard pressed to deliver on the current administration’s goals of food security, farmers’ prosperity and poverty reduction,” the stakeholders said.
Finance Secretary Benjamin Diokno said President Ferdinand “Bongbong” Marcos Jr. has approved the merger of the two banks, a plan that goes way back to the administration of the late Benigno Aquino III.
The plan was dropped by the previous Duterte administration when it stepped into power in 2016, as former Finance Secretary Carlos Dominguez III had argued that the merger “will not serve the public’s interest” since LandBank and DBP have different functions.
Even Marcos had, in the past, voiced loud opposition to the 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.
Diokno said the merger could result in the largest banking entity in the country. But Fitch Ratings noted that the combined asset size of LandBank and DBP — or about P4.2 trillion — would just be slightly larger than that of BDO.
Marcos has taken the agriculture portfolio, with a goal of growing the sector to 1.8-3.3% annually within his term.
"Such merger will need legislation by Congress to amend the existing charters of both banks and to establish a new one for the merged institution. All this will cause uncertainties, delays and other unwanted consequences in the operations of LBP and DBP,” the stakeholders said.
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