Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

House Bill'No, 135

Introduced by HONORABLE DANILO E. SUAREZ

EXPLANATORY NOTE

Since the Asian currency crisis in 1997, mergers and acquisitions in the Philippine
banking industry have become widespread. Mergers are part of an ongoing campaign by the
Bangko Sentral ng Pilipinas, in complete reverse from former Governor Gabriel Singson's
thrust to create more banks, supposedly to encourage competition. Former Governor Rafael
Buenaventura has urged the creation of more financially stable banks. Current governor,
Amando Tetangco, has adopted Governor Buenaventura's position.

With the onset of these mergers, government financial institutions must likewise
follow suit, The increase in asset and resource base of various commercial banks should be
a signal to government-owned banks to consolidate and beef up their respective financial
positions. It can be said that the Land Bank of the Philippines (LBP), the largest
government-owned bank has continuously fulfilled its mandate and has helped improve the
lives of Filipinos and has transformed rural communities into areas of growth and
development. On the other hand, the Development Bank of the Philippines (DBP), as the
country’s pre-eminent development financial institution, has consistently taken upon itself the
strategic task of influencing and accelerating sustainable growth, through the provision of
resources for the continued well-being of the Filipino people.

In order to allow these banks to continue fulfilling their development and social
mandate more meaningfully, a fusion of the LBP and the DBP is indispensable. Needless to
State, the merger of the two will move the banks to a more competitive position and is
expected to help a greater number of people and reach more areas of concern.

With the aforementioned, the approval of this bill is earnestly sought.

‘4
inten 7%
DANILO E. SUAREZ

Representative
Third District, Province of Quezon


Republic of the Philippines
HOUSE OF REPRESENTATIVES
‘Quezon City

FIFTEENTH CONGRESS
First Regular Session

135

House Bill No.

Introduced by HONORABLE DANILO E. SUAREZ

AN ACT MERGING THE LANDBANK OF THE PHILIPPINES AND THE DEVELOPMENT
BANK OF THE PHILIPPINES AND FOR OTHER PURPOSES

Be it enacted by the Senate and the House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Declaration of Policy. It is a fact that financing institutions play a pivotal role in
the quest for sustainable growth and development in the country. However, it is likewise
recognized that the creation of more financially-stable banks has become imperative after the
Asian currency crisis, thereby encouraging mergers and acquisitions in the Philippine
banking industry,

Government banks are not spared of this need for financial viability and strength, thus the
merger of government banks is encouraged to be at par with other commercial and universal
banks.

SECTION 2. Merger of the Land Bank of the Philippines and the Development Bank of the
Philippines. The Land Bank of the Philippines (LBP) and the Development Bank of the
Philippines (DBP) shall be merged.

SECTION 3. Effects of the Merger. The Land Bank of the Philippines shall be the surviving
entity, being the larger bank in terms of assets and resources. The merger will not affect the
mandate of the LBP and the DBP in providing assistance to priority sectors such as small
farmers and fisherfolk, micro-enterprises, SMEs, agri-business, apart from their commercial
banking services.

SECTION 4. Implementing Rules and Regulations. The Board of Trustees of LBP and DBP
shall formulate the Implementing Rules and Regulations for this Act within ninety (20) days
from approval hereof.

SECTION 5. Appropriation Clause. The amount necessary to implement this Act shall be
included in the General Appropriations Act of the year following its enactment into law.

SECTION 6. Repealing Clause. All laws, decrees, issuances, rules and regulations
inconsistent with the provisions of this Act are hereby repealed.

SECTION 7. Effectivity Clause. This Act shall take effect within fifteen (15) days after its
publication in at least two (2) newspapers of general circulation

Approved.