Gov’t finalizing proposed changes in charters of DBP, LANDBANK

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BILLS seeking to amend the charters of the Land Bank of the Philippines (LANDBANK) and Development Bank of the Philippines (DBP) to allow for their public listing will be filed as soon as Congress resumes session, the Finance chief said.

“There’s a bill (for) LANDBANK, so we’re finalizing the DBP version also. There’s no session right now. When Congress resumes session, we’ll be done with it. We’ll file it,” Finance Secretary Ralph G. Recto told reporters last week.

The Finance department earlier said it wants to amend the charters of both state banks to increase their authorized capital stock. The banks will also be mandated to conduct an initial public offering (IPO).

Mr. Recto did not indicate the amount for the increase in capitalization.

“I don’t remember right now. I filed a bill for DBP to make it P100 billion, but now they’re talking about P300 billion. I don’t know (about) LANDBANK,” he said.

“I can’t remember exactly right now. But yes, we will increase their capitalization. Now, it doesn’t mean that we will fund it with taxpayers’ money immediately. What we can do is we allow them to keep the dividends, which will be part of their capital,” he added.

Earlier this month, DBP said it is seeking to increase its authorized capital stock to P300 billion from P35 billion to expand its products and services.

Mr. Recto added that he is not worried about the lenders’ financial stability.

This, after both banks sought regulatory relief from the central bank last year amid the impact of their contributions to the country’s first sovereign wealth fund on their capital positions.

Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said the proposal to amend the two banks’ charters indicates a “willingness to adapt to changing financial landscapes and regulatory environments.”

“Such amendments could potentially allow for greater flexibility in their operations, including their ability to access capital markets for funding and investment,” he said in a Viber message.

The public listing of the state lenders will help increase transparency, accountability, and potential efficiency in the banks’ operations, Mr. Arce added.

“By opening up to public markets, these banks could attract more investors, diversify their funding sources, and potentially unlock greater value for stakeholders,” he said.

If the listing is successfully executed, this would help inject fresh capital into both banks and strengthen their financial positions, Mr. Arce said.

“This, in turn, could enhance their capacities for lending, supporting economic growth, and development initiatives. Additionally, increased scrutiny and market discipline associated with public listing could encourage greater efficiency and risk management within these institutions,” he said.

“It’s important to note that pursuing an IPO for government-run companies like LANDBANK and DBP would require legislative changes. This could pose challenges and may take time to materialize due to the need for political consensus and legal processes,” Mr. Arce added.

April Lynn Lee-Tan, COL Financial Group, Inc. chief equity strategist, said the proposed increase in the banks’ capitalization is a welcome move.

“Increasing a bank’s capital is always good and will improve its capacity to lend,” she said in a Viber message.

Ms. Tan also noted that it is crucial to assess “whether or not it is attractive for the two banks to list given the unattractive valuations of most banks.”

“An IPO is proven to be an effective financial mechanism to raise funds provided all the required parameters are set in place,” Antonio A. Ligon, a law and business professor at De La Salle University in Manila, added in a Viber message. — Luisa Maria Jacinta C. Jocson