MANILA – The Governance Commission for Government-owned or Controlled Corporations is proposing the merger of the Development Bank of the Philippines and Land Bank of the Philippines.
It said the consolidation of DBP and LBP is necessary as the functions or purposes of both banks duplicate and unnecessarily overlap with one another, which is one of the standards for implementing a merger under R.A. No. 10149.
R.A. No. 10149 is an act to promote financial viability and fiscal discipline in government-owned or controlled corporations, and to strengthen the role of the state in its governance and management to make them more responsive to the needs of public interest and for other purposes.
The proposal said the merger of the two banks will result in more effective, efficient and sustainable in carrying out the mandates of both DBP and LBP, particularly in anticipation of the wave of foreign banks that may enter the Philippine market upon the occurrence of ASEAN integration in 2015.
The merger will also complement the implementation of the Treasury Single Account or TSA, which is a unified structure of government bank accounts enabling the Bureau of Treasury to conduct efficient cash management and lessen the incidence of idle funds.
The TSA will be implemented in phases beginning in January 2014 and under the TSA, all government revenues deposited to accredited agent banks will be swept to a single account with the BSP.
The government’s estimated daily expenditures shall be deposited to the government banks under the expenditure account, and suppliers/payees will be paid through the e-Modified Disbursement System. Funds in excess of the required minimum balance of the expenditure account will be swept daily to BSP for short-term investments. Thus, individual government bank accounts will have zero balance at the end of each day.
The consolidated entity will have enhanced retail and wholesale banking operations relative to that of DBP and LBP as separate corporations.
Redundant branches may be closed, which will result in savings that can be used to improve existing ones or open new branches in previously unbanked areas in the interest of inclusive growth, or even improve accessibility in already banked areas for better delivery of services coursed through government finance institutions. (Mindanao Examiner Business)
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