DBP now exempted from remitting 2022 net earnings with gov't
MANILA, Philippines — President Ferdinand Marcos Jr. exempted the Development Bank of the Philippines (DBP) from sharing its 2022 dividend earnings with the government to “strengthen its capital position” and to comply with the regulations of the Bangko Sentral ng Pilipinas (BSP), the Presidential Communications Office (PCO) said on Friday.
Marcos issued Executive Order No. 48 signed through Executive Secretary Lucas Bersamin which adjusted the percentage of net earnings to be declared and remitted by DBP for Calendar Year 2022 from 50% to 0%.
“Pursuant to Section 5 of RA (Republic Act) No. 7656, and in the interest of national economy and general welfare, the percentage of net earnings to be declared and remitted by the DBP to the National Government for CY 2022 is hereby adjusted from fifty percent of its annual net earnings to zero percent,” the Palace said.
The lowering of the dividends, according to the Palace, is to support the projects of DBP “for the national economy and general welfare.”
The DBP was established through legislation to meet the future requirements of agricultural and industrial businesses, especially in rural areas, with a focus on supporting small and medium-sized enterprises.
The Palace also said that Finance Secretary Benjamin Diokno recommended the slashing of DBP’s government remittance to strengthen its capital position.
“Finance Secretary Benjamin Diokno recommended the downward adjustment of the percentage of DBP’s net earnings to be declared as dividends to the National Government for 2022 to strengthen its capital position, comply with the Bangko Sentral ng Pilipinas (BSP) regulations, and augment its role in the provision of crucial resources to priority sectors for the country’s overall socioeconomic development,” the Palace said.
The exemption was also applied to LandBank of the Philippines in October when Marcos also adjusted their required share to the government from 50% to 0%.
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The move came months after DBP and LandBank requested a regulatory relief from the BSP to keep up with the required 10% capital adequacy ratio. This measure aimed to help in restoring capital reserves allegedly weakened after the initial remittance of P75 billion as the starting capital for the Maharlika Investment Fund.
DBP, which ranked ninth in terms of bank assets, remitted P25 billion pesos as a starting fund for the MIF.
The bank has an authorized capital of P35 billion which is relatively smaller compared with the P200 billion capital of Landbank, which is the second largest bank in the country in terms of bank assets.
Depending on the number of branches, universal banks are required by the BSP of having P3 billion up to P20 billion as minimum capitalization.
The MIF was flagged by a Singapore-based thinktank on November 27, saying that its P500 billion capital might impact the financial institutions funding it.
According to Republic Act No. 7656, every government-owned or-controlled corporation must declare and remit 50% of their yearly profits as dividends—whether in cash, stock, or property—to the national government.
But Section 5 of RA 7656, gives the president the authority to modify the portion of the yearly profits that a GOCC must declare based on the recommendation of the Finance secretary.
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