PROPOSED laws amending the charters of Land Bank of the Philippines (LandBank) and Development Bank of the Philippines (DBP) will be filed once Congress returns to work next month or during its third regular session in July, Finance Secretary Ralph Recto said.
"There's a bill for the LandBank already ... we're also finalizing the version for the DBP," he told reporters last week.
Finance Secretary Ralph Recto. Photo from Department of Finance"By June, [or] May, we're going to have a meeting, we'll file it then," he added.
Both the House of Representatives and the Senate are currently on a break that began last Saturday. Legislators are scheduled to return to work on April 29 before adjourning anew from May 25 to July 21.
Last month, Recto said the government was looking to revise the laws that established the two state-owned banks with a view to eventually taking both public. This followed an announcement that plans to merge the two — a move heavily criticized by the DBP — had been abandoned.
"We are exploring the amendments to the charters of the Land Bank of the Philippines and the Development Bank of the Philippines, including their possible public listing, to broaden the local capital market," the Finance chief said.
The proposed bills, he reiterated last week, will mandate the conduct of initial public offerings (IPOs).
Both banks will also receive a capitalization boost, to be funded by the dividends that normally would be remitted to the government.
"[W]e will increase the capitalization ... it doesn't mean that we will fund it with taxpayers' money immediately," Recto said. "Their dividends can be used for that."
"We allow them to keep the dividends, which will become part of their capital...," he added.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said LandBank and DBP remained profitable so an IPO would be an ideal way to raise funds.
This will also maximize their market values, he added, "especially if market conditions improve further that would enable them to sell at the highest price possible and get the most proceeds in their capital raising."
"This would also enable the investing public to participate, invest, and position with the growth of these banks."
Recto also dismissed concerns over the impact on LandBank and DBP's credit profiles of their having funded the Maharlika Investment Fund, the country's first sovereign wealth fund.
Both asked the Bangko Sentral ng Pilipinas (BSP) last year for regulatory relief from capitalization requirements given sizeable contributions to the Maharlika Fund: P50 billion for LandBank and P25 billion for DBP.
The BSP has said that both remain compliant with minimum capital requirements despite the Maharlika contributions and officials said the request was merely "preemptive."
"To me, it's a nonissue because it's government-guaranteed anyway," Recto said.
"The books of the LandBank are fine. The books of DBP are fine as well," he added.
LandBank assets were at P3.3 trillion last year while the DBP's stood at P978.5 billion as of the end of the third quarter based on latest available data.
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