THE House Committee on Banks and Financial Intermediaries approved on Tuesday a bill reorganizing the Land Bank of the Philippines, including the privatization of a third of its common voting shares.
According to Panel Chairman and Quirino Rep. Junie E. Cua, the committee is now preparing its report for final approval of the bill.
According to Cua, House Bill (HB) 10440 that seeks to amend the LandBank Charter will place the bank “in a stronger position to pursue further the policy thrust of the national government, especially on countryside development.”
The bill would allow the state-owned bank “to boost its capital-raising capabilities, sustain a competitive workforce and streamline its banking processes.”
Cua said this policy reform is also expected to bolster the lender’s existing corporate and risk-governance mechanisms that will drive greater operational efficiencies and enhance Landbank’s organizational agility “to elevate its financial-inclusion initiatives.”
Start-ups, MSMEs
DURING the hearing, the Bangko Sentral ng Pilipinas has recommended to the committee and LandBank to include start-up or fledgling agricultural endeavors and/or small businesses among its beneficiaries.
“Considering its mandate to be the primary government financial institution for agricultural development, the criteria for eligibility for the special socialized credit facility should not be so rigid as to be exclusive to farmers and fisher[men] with a solid financial footing,” the BSP said in its position paper.
“Moreover, farmers with less than five years of operations should be given priority in its lending operations,” according to the BSP position paper. “Non-collateral credit facilities should be expanded and strengthened. Individual borrowers and qualified agricultural MSMEs [micro, small and medium enterprises] should also be considered for this [special socialized] program.”
LandBank President and CEO Cecilia C. Borromeo said the legislation will help the bank to serve at least 300 unbanked local governments in the country.
“LandBank has a plan to establish attached points to these communities through [the] establishment of branches,” Borromeo said.
Shares sale
HB 10440 also seeks to allow the LandBank to increase its capitalization up to such an amount as may be necessary to attain the objectives of the Charter.
The lender has an existing authorized capital stock of P200 billion, divided into two billion common shares with a par value of P100 per share. The lender’s board can only increase capitalization upon the recommendation of the Secretary of Finance and with the approval of the President of the Philippines, according to HB 10440.
The measure also gives the bank the power to offer and issue common and preferred shares of stocks in such manner and in such quantities as approved by the Finance Secretary upon the recommendation of the Board of Directors and in accordance with applicable laws, rules and regulations.
The bill, however, said that the national government shall maintain, at all times, at least two-thirds ownership of the total outstanding common voting shares of the bank.
Currently, LandBank is 100-percent owned by the government. However, the bank has been authorized to distribute common and preferred shares to groups representing small farmers and fishermen.
Securities issuance
HB 10440 also allows the state-owned lender—upon the approval of the Secretary of Finance—to issue all kinds of bonds, debentures, securities, collaterals and other evidences of indebtedness and/or the renewal or refunding thereof.
The bill said the bank may determine the terms, rates and conditions up to an aggregate amount not exceeding, at any one time, ten times its paid-in capital and surplus. Such move, however, would be subjected to compliance with the provisions of applicable law, and rules and regulations promulgated by the BSP Monetary Board.