BANGKO Sentral ng Pilipinas (BSP) governor Eli Remolona yesterday said there’s no application yet for the proposed merger of the Land Bank of the Philippines and Developmental Bank of the Philippines (DBP).
Finance Secretary Benjamin Diokno earlier revealed the proposed merger of the two state-run banks to streamline operations and save on costs.
In any case, Remolona said that the BSP is ready to supervise the surviving entity if it happens.
“We’re ready to supervise a merged entity. But in the meantime, we’ll supervise them separately. Once they decide to merge, then we will go in and we will look into the books of the merged entity. Panibagong lisensya ‘yon (That requires a new license),” Remolona said.
Asked if the merger of the two government banks will be “too big to fail,” Remolona said that there are metrics to categorize a bank under Domestic Systematically Important Banks (D-SIBs).
“It will be a big bank. One of them is already a D-SIBs. D-SIBs are selected based on well-understood criteria: size, complexity, interconnectedness between the bank and other entities. Once you’re a D-SIB, there’s extra capital buffer and more intense supervision,” Remolona said.
BSP regulates more or less 10 DSIBs that are considered “too big to fail,” according to Remolona.
The two government banks have contributed to the Maharlika Investment Fund, with an initial P50 billion and P25 billion infusion, respectively.
Despite this, Remolona said both banks are still compliant with the central bank’s capital requirements. But he added the 2 banks have asked for regulatory relief.
“Because they are providing essentially capital which reduces their equity, so it may put them non-compliant with our capital requirements. That’s mainly the relief they want,” Remolona said.
“Sa ngayon, compliant pa. Even after the contribution to Maharlika,” Remolona said.
Land Bank earlier said it is prepared to execute the proposed merger with the DBP if it pushes through. (ABS-CBN News)
