MANILA (UPDATE)— Finance Secretary Benjamin Diokno on Tuesday said President Ferdinand Marcos Jr. supports the proposed merger of state-run banks Landbank of the Philippines and the Development Bank of the Philippines.

The matter was discussed during a sectoral meeting held on Tuesday, Diokno said in a briefing.

Merging the 2 financial institutions will create a bank that's bigger than BDO Unibank in terms of assets, the Finance chief said.

BDO is currently the country's largest bank in terms of assets as of September 2022, followed by the Landbank of the Philippines. DBP is at the 8th spot.

"By merging the 2, it will now become the number 1 bank in the Philippines... That’s really the best practice, the biggest bank is owned by the state, globally," Diokno said.

"The President expressed the desire to merge the 2 to make it the biggest bank in the country because of the recent financial developments abroad," he added.

The merger will result in savings for the government of about P5.3 billion per year in the next 4 years. Loans from the surviving entity may also be lower than the current rates, he said.

The finance chief added that the government would be able to save P5.3 billion per year or at least P20 billion for the next four years because of the merger.

He also assured the President that none of their services “will be lost” because of this.

"As a result of the merger, there will be savings, the merged bank will be stronger. One likely outcome of this is maybe interest rate charged will be lower," Diokno said.

“Now, ang advantage nito talaga is that we will be able to save a lot of money for the national government. We estimate that the savings will be in the neighborhood of—at least for the first year, around… let me be more precise – five billion,” he added.

AFFECTED WORKERS

When asked if this would lead to the retrenchment of workers, Diokno answered in the affirmative.

“Definitely may mawawala kasi there’s redundancy then mare-reduce yung number of branches but there’s usually a package naman na ibibigay,” he said.

(Definitely jobs will be lost because of the redundancy and the branches will be reduced. We will give packages.)

“Voluntary, they can choose, kasi (because) they are government officials, they can retire under GSIS or we will offer an attractive package to those who will be separated.”

Diokno said Landbank has 752 branches while the DBP has 147 branches. Only 22 branches of the DBP will be retained, he said.

“The plan is that Landbank will have a branch in all LGUs in the Philippines. It could be a combination of light branches or big branches, ATMs, etcetera,” he said.

Marcos in 2016, when he was still running as vice president, opposed the merger as “it will further prejudice the country's farming sector.”

He also described the resulting bank as a commercial one, which can potentially remove Landbank’s ability to provide loans for agribusiness and other banking support to farmers.

The government-owned bank also has credit assistance to farmer cooperatives and small farmers.

“Wala na tayong agricultural bank so wala na tayong bangko na talagang naka-tugon sa pangangailangan ng farmers,” Marcos said in 2016.

(We no longer have an agricultural bank so we do not have a bank solely intended to help farmers.)

When asked by reporters what changed the President’s stance on the matter, Diokno said this was because of his current views on international developments on finance.

“Big banks are folding, etcetera plus he has not changed his mind when he was elected President. I know he was for this proposal,” he added.

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Video from PTV