President Aquino hates the idea of putting a number of bank employees out of work, and has refused to sign the proposed executive order (EO) merging the Land Bank of the Philippines with the smaller Development Bank of the Philippines (DBP) on this basis, executives said on Sunday.
That EO was due for signing this week under a timetable set by an interagency technical working group, headed by the Department of Finance, with the Bureau of the Treasury and the Bangko Sentral ng Pilipinas working closely with supporters in Congress.
Executives said President Aquino understands the need to fuse the resources of the state-owned lenders for reasons of efficiency and economies of scale, but questioned the wisdom of downsizing by laying off bank staff.
“You wanted to make the bank bigger, but why are you laying off employees?” President Aquino was quoted as having quizzed the lenders’ executives in Malacañang just last week.
That EO had previously been drafted by the Government Commission for Government-owned or -Controlled Corporations (GCG) mandating the on-again and off-again merger of the state-owned lenders calling for the elimination of so-called redundant positions.
As a result, the hoped for Malacañang approval around the third week of this month may have to be scuttled and, by extension, delay the merger timetable anticipating a functional merger at this time of year and a full merger by late October at the earliest and by December at the latest.
It was also learned that Justice Secretary Leila de Lima also pointed out the apparent lack of approval of the proposed merger by the Bangko Sentral ng Pilipinas and the Philippine Deposit Insurance Corp. (PDIC). Regulators’ consent is of paramount importance in merger exercises of this scale, de Lima had said.
“Why have the banks do not have the consent yet from the BSP and PDIC?” the justice secretary was quoted as asking President Aquino rhetorically. Deputy BSP Governor for the Supervision and Examination Sector Nestor A. Espenilla Jr. on Sunday confirmed the lack of prior central bank review of the proposed merger, saying that he has no knowledge such a document had been passed on to the regulators.
“I don’t think we have received a formal application,” said Espenilla, who heads the supervision and examination sector at the BSP.
Rep. Nelson Collantes of the Third District of Batangas, chairman of Committee on Banks and Financial Intermediaries, previously vowed to push for the passage of the law merging the government-owned lenders, with Land Bank as the surviving entity.
House Bill 5755 directs the GCG to implement the merger within one year from the effectivity of the law, and to approve the reorganization plan of the merger and the so-called Compensation and Position Classification System for the merged entity.
Collantes said the consolidated entity should prove more efficient in carrying out their mandate, particularly in anticipation of the wave of foreign banks competing with the locals this year and down the line. The merger should also improve the balance-sheet capabilities of the banks, leading to a stronger, more competitive lender relative to other banks. Executives, likewise, said Sen. Sergio Osmeña III, chairman of the Senate Committee on Banks, reportedly favored enhancing the DBP charter.
If the merger will push through, the senator said,” DBP must be the surviving entity,” according to one government bank executive.
When merged, the DBP will focus on supporting priority development programs of the government, like infrastructure, tourism, agriculture, industrial enterprises, micro, small and medium enterprises, education, health care, socialized housing, environment and the financial requirements of the government.
The pursuit of these objectives will be undertaken under the context of a financially viable, globally competitive banking institution.
“The merged bank will secure substantial earnings and safeguard its liquidity position to sustain its developmental banking operations in support of the government’s national develop-ment agenda and sustainable economic growth,” the executives said.
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Another “teka/teka” debacle in the making. All along I had the impression that Pnoy is “manhid” per his veep but this bleeding heart concern for the would be retrenched excess employees is a revelation. The political season has indeed started early.