Land Bank of the Philippines may overtake the Sy-led BDO Unibank Inc. as the country’s largest bank after President Marcos approved the proposed merger of the two state-owner lenders.
Finance Secretary Benjamin Diokno said the government will merge the Development Bank of the Philippines (DBP) with Land Bank, effectively creating the largest financial institution in the country in terms of assets and deposits.
“The merger will create a bigger and stronger bank to better serve the country’s development needs,” Diokno told reporters on Tuesday, March 28. “The combined branches of the two banks results in a wider network of its banking operations.”
Based on the Bangko Sentral ng Pilipinas data, BDO is currently the country’s leading bank in terms of assets with P3.73 trillion as of September 30, 2022.
The Sy-led bank is followed by Land Bank with assets worth P2.76 trillion, while DBP ranks eighth with P1.035 trillion worth of assets.
“The merger complements the strengths and addresses the weaknesses of the two banks,” Diokno said. “The improved financial position will [also] provide a bigger headroom for loans that can be utilized for development projects.”
Diokno said the planned merger has already secured the approval of President Marcos and will eliminate redundancy and inefficiency in operations of Land Bank and DBP.
“Projected operating costs savings due to the merger could reach at least P5.3 billion per year, or more than P20 billion over the next four years; this is a conservative estimate,” Diokno said.
He added that the merger will help avoid the need for DBP to recapitalize by around P30 billion to P100 billion in capital infusion from the national government.
“The merged bank will be in the best position to serve as the sole authorized government depository bank for the entire Philippine government and its instrumentalities,” Diokno said.
“Having a single bank remains the best practice in the region and simplified procedures with counter parties,” he added.
