Development Bank of the Philippines said it needs to have a clearer mandate and faster processing to fund customers’ businesses more efficiently, instead of merging with the Land Bank of the Philippines or LandBank.

“Banks tend to lend to more profitable businesses. Most banks avoid farmers or fisherfolks because of their business volatility. We have overlapping customer segments, but LandBank should predominantly lend to agriculture workers,” DBP president and chief executive officer Michael de Jesus told the media on Thursday.

“Instead, the mandates and customer segments of the two banks could be more defined,” he stressed.

Review merger impact

DBP chairman Dante Tinga shared that President Ferdinand Marcos Jr. had vowed during a sectoral meeting to study the DBP’s appeal for a review of legal mechanisms and the economic impact of the merger. The appeal was submitted to the President in mid-May.

These were DBP’s responses to the merger proposal by Department of Finance Secretary Benjamin Diokno who said Marcos would release an Executive Order this month to approve the merger.

Diokno argued that the merger could provide government with savings of P5.3 billion each year and eliminate the need for DBP recapitalization of up to P100 billion and operational redundancies.

However, Tinga said, “The banking processes may be redundant but the customers are different.”

Customer segments reduced

De Jesus is worried that as the bank becomes bigger if the merger pushes through, its customer segments might be reduced.

“There might be products that could be left out or customers that might not be served when the banks merge. Just like commercial banks, we compete for similar customer segments, but we assure we are more experienced in certain areas like power and infrastructure projects.”

Aside from defining the banks’ customer segments more clearly, De Jesus, who worked on corporate lending at Rizal Commercial Banking Corporation, said DBP officials are reviewing lending processes to serve customers faster.

“In private banks, loans are delivered in two months. Here, it’s five months from the time you shake your customer’s hand. We’re improving on that to reduce 10 steps to five steps, or by common sense.”

De Jesus said the proposed single superbank could have longer banking processes, which would hurt customers.

However, De Jesus said they will abide by Marcos’s decision on the proposed merger.

Still, Tinga warned that the merger cannot be realized with a mere Executive Order but must be discussed with all stakeholders through Congressional hearings.