MANILA, Philippines - The merger of the LandBank of the Philippines (LBP) and Development Bank of the Philippines (DBP) will have to be scrutinized first by the Bangko Sentral ng Pilipinas (BSP) before it becomes final, Malacañang said yesterday.
Presidential Communications Operations Office Secretary Herminio Coloma Jr. also said officials of the DBP and some entities under it would still have to answer reports released by the Commission on Audit (COA) after President Aquino approved the merger through Executive Order No. 198.
Presidential Communications Development and Strategic Planning Office Undersecretary Manuel Quezon III, for his part, said the Department of Finance and the Department of Budget and Management had already explained that the merger of the two banks was aimed at serving the public better by enhancing the institutions’ efficiency.
Valenzuela City Rep. Sherwin Gatchalian said Malacañang’s move to merge the two banks might be intended to cover up mismanagement, huge losses and illegal transactions in the DBP.
Gatchalian also questioned why the government approved the merger despite objections from the BSP and members of Congress.
He added officials of the DBP and some entities under it had been subjects of four negative reports from the COA in 2014 alone.
“There is no truth to the allegations. The President’s decision was based on the Constitution and the Governance Act (Republic Act 10149),” Coloma said.
He said it was important to strengthen and stabilize the government’s financial sector so it could better support development programs in infrastructure, agriculture and other sectors.
Speaker Feliciano Belmonte Jr. said the merger should have been brought up for Congress’ approval and Finance Secretary Cesar Purisima should explain why he had it approved through executive action.
According to the DOF, the merger of LBP and DBP is necessary as the functions of both banks unnecessarily overlap with each other.
The merged entity would be more effective, efficient and sustainable in carrying out the mandates of both banks, especially with the entry of more foreign banks into the country following the liberalization of the local banking sector, the DOF said.
The consolidation of the two banks is also expected to complement the implementation of the Treasury Single Account (TSA), a unified structure of government bank accounts.