Purpose and Roles of the Banks
- Development Bank of the Philippines (DBP): provides banking services mainly for medium- and long-term financing to SMEs in agricultural and industrial sectors, with a focus on countryside operations.
- Land Bank of the Philippines (LBP): finances acquisition and distribution of agricultural estates, supports agrarian reform beneficiaries, and acts as the financial intermediary for the Comprehensive Agrarian Reform Program (CARP).
Rationale for the Merger
- Functional duplication and overlap between DBP and LBP.
- Merger expected to enhance financing of priority sectors: infrastructure, public services, agriculture/agrarian reform, and SMEs.
- Expected to improve access and quality of financial services to unbanked and underserved areas.
- Aim to build a stronger, more competitive universal development bank to propel countryside development and support sustainable, inclusive growth.
Approvals and Capitalization
- Both banks’ Boards approved the merger in March 2015.
- LBP’s authorized capital stock increase from P25 Billion to P200 Billion was approved to prepare for the merger.
- The Department of Finance (DOF) recommended capital infusion of at least P30 Billion to LBP, to be sourced legally or included in future budgets.
Declaration of Policy
- Need to rationalize operations of government agencies and GFIs to strengthen financial capacity and improve service delivery.
- Emphasis on preparing GFIs for regional economic integration.
- Sustainable growth in capital and credit facilities for public benefit and protection.
- Continued social mandate to assist priority sectors like farmers, fisherfolk, agrarian reform beneficiaries, and SMEs while protecting investments.
Operational Merger Provisions
- The merger is operationalized by transferring assets and liabilities from DBP to LBP, with LBP as the surviving entity.
- Requires written consent from the Philippine Deposit Insurance Corporation and approval from Bangko Sentral ng Pilipinas (BSP).
- References to "merged banks" in the Order relate to this operational merger.
Capital Stock Increase and Capital Infusion
- LBP's authorized capital stock set at P200 Billion, divided into 2 billion common shares at P100 per share.
- DOF and Department of Budget and Management (DBM) directed to support capital infusion of at least P30 Billion for LBP.
Implementation and Cooperation of Government Agencies
- GCG will implement the merger and, in coordination with DBP and LBP, will determine how assets and liabilities are transferred.
- Other government offices and agencies must take necessary actions to implement the merger within one year from effectivity.
Reorganization of Merged Entity
- GCG to develop and execute reorganization plans, compensation, and position classification systems following GOCC Governance Act principles.
- Employees retained must not experience service breaks, salary reductions, or loss of lawful benefits.
- Separated employees entitled to Merger Incentive Pay (MIP) in addition to existing separation benefits, calculated according to length of government service:
- First 20 years: 1.00 x Basic Monthly Pay (BMP) x number of years
- 21 to 30 years: 1.25 x BMP x number of years
- 31 years and above: 1.50 x BMP x number of years
Repeal of Conflicting Issuances
- Any prior executive orders, rules, or issuances inconsistent with this Order are revoked, amended, or modified accordingly.
Separability Clause
- Invalidation or unconstitutionality of any provision does not affect the remaining provisions, which shall remain valid and in force.
Effectivity
- The Executive Order takes effect immediately upon publication in a newspaper of general circulation.