A former top official of the Judiciary cautioned the government against proposal to merge the country’s top financial institutions, saying it might compromise its ability to render public service to their respective entities under a unified set-up.
Retired Supreme Court Chief Justice Artemio Panganiban Jr. said the proposed merger of Development Bank of the Philippines and Landbank of the Philippines is “ill-advised” as the two state institutions have varying corporate objectives and mandate, making them distinct operationally.
“The proposed merger of DBP and LBP is ill-advised because the two government banks have different visions and missions, unlike private banks that have identical aims and activities,” Panganiban said. “I think this rule [merger] does not apply to the two government banks.”
The planned merger, which was shelved in 2016 by the Governance Commission on GOCCs after a botched attempt by former President Aquino through the issuance of Executive Order No. 198, is being revived by the Department of Finance to create a “bigger and stronger” bank that eliminates “redundancy and inefficiency” in its operations.
DBP and LBP have separate distinct mandates, with the former focusing on four key sectors: infrastructure and logistics; micro, small and medium enterprises; the environment; and social services and community development, while the latter is geared towards small farmers and fisherfolk, agrarian reform beneficiaries and aqua-related businesses.
Panganiban, who was the country’s 21st Chief Justice, said mergers would be best applied to the private sector, and not for the public sector, as it would lead to more stable banks that would be beneficial to the economy.
He said at present, private local banks, even the major ones, remain small compared to their counterparts in the region, making consolidation a more viable option in the private sector to achieve stability.
“Mergers for the private sector will lead to more stable banks which would be good for the economy and the country” Panganiban said.
Panganiban, who served as the top magistrate from 2005 to 2006 remains active in the business community serving as independent director in some of the leading conglomerates and firms in the country.