PHOTO/IMAGE: Landbank Official, DBP logo / INQUIRER FILES
MANILA, Philippines —Two senators have cautioned the government that merging two state-run banks would create a “super monopoly” or a financial behemoth “too big to fail.”
On Tuesday, Finance Secretary Benjamin Diokno disclosed that the planned merger of the Land Bank of the Philippines (Landbank) and the Development Bank of the Philippines (DBP) already got the approval of President Ferdinand Marcos Jr.
On Wednesday, Senator Risa Hontiveros advised the government to “proceed cautiously and prudently” with the merger, which she said “would create the largest bank in the Philippines, and perhaps would result in a financial entity ‘too big to fail.’”
“One painful lesson from the 2008 Global Financial Crisis is that large banks are riskier, and tend to introduce more systemic risk into the financial system,” the senator said.
Besides, Hontiveros said that the two banks “carry out separate and distinct mandates,” with the DBP financing infrastructure, logistics, and commerce and the Landbank helping small farmers, fisherfolk, and agrarian reform recipients acquire land holdings.
“We have to understand exactly where the redundancies are and what efficiencies can be gained from this merger, and balance these against any risks that the merger may pose to the economy and financial system,” said the senator.
“These two institutions have very different mandates and very different client bases. Bakit ipagsasama ang dalawang banko na magkaiba ang misyon at layon?”
(These two institutions have very different mandates and very different client bases. Why merge these two banks with different missions and goals?)
“At the end of the day, what is this merger truly for? Bakit gagawin ito? Sino ba ang makikinabang dito? Certainly not the employees, whose jobs are suddenly at risk,” she further said.
(At the end of the day, what is this merger truly for? Why is it being done? Who will benefit from it? Certainly not the employees, whose jobs are suddenly at risk.)
Hontiveros said she would file a resolution, urging the Senate “to safeguard the financial sector’s stability by exercising oversight over the proposed merger.”
Senator Sherwin Gatchalian, meanwhile, raised “serious concerns” over the planned merger as this, he said, would create a “super monopoly” that will have control over local government unit deposits.
“So kung masama ang serbisyo ng super monopoly wala silang choice. Kung mataas ang interest rate sa kanilang loans, wala silang choice. It’s bad for our local government units,” Gatchalian said in an interview at the Senate on Tuesday,
(If the service provided by the super monopoly is bad, they don’t have other choices. If the interest rate on their loans is high, they won’t have any choice. This is not good for our local government units)
“I have concerns, very serious concerns,” he later said, adding he has yet to read the supposed benefits from the said merger.
RELATED STORIES:
Bongbong Marcos backs Landbank-DBP merger, says Finance secretary
Landbank-DBP merger in the works