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April 12, 2024

LandBank, DBP to meet capital requirements

Finance Secretary Ralph G. Recto expressed confidence in Land Bank of the Philippines and Development Bank of the Philippines (DBP) meeting their capital requirements despite their involvement with the Maharlika Investment Corp. (MIC).

Recto informed reporters late Tuesday afternoon that if Landbank and DBP generate dividends this year, those dividends can be considered part of retained earnings, thereby potentially augmenting their capital.

President Ferdinand Marcos Jr. issued Executive Order (EO) 43 in October 2023, which absolved LandBank from declaring and remitting net earnings to the national government for 2022. Subsequently, EO 48 in November 2023 exempted DBP from remitting its net earnings for 2022 to the national government.

Earlier, the Department of Finance (DOF) announced that the MIC board approved the appointment of Land Bank and DBP as depository banks of MIC.

Under DOF’s Department Circular 002-2022, government-owned and controlled corporations like MIC can deposit and maintain government funds with Land Bank and DBP without prior approval from the Secretary of Finance.

Regarding the proposed merger of the two state-run banks, Recto said the country benefits from having two government depository banks with distinct mandates.

The attempts to merge Land Bank and DBP have a long history, with Marcos advocating for it since last year.

The MIC, established through Republic Act (RA) 11954, serves as the sole vehicle for mobilizing and utilizing the Maharlika Investment Fund for investments aimed at generating optimal returns.

The law stipulates an authorized capital stock of P500 billion for MIC, with Landbank and DBP contributing P125 billion as seed capital. However, the collective P75 billion remitted by the two state-run lenders falls short by P50 billion as required by law.