Maharlika Investment Corporation (MIC) president and chief executive officer Rafael Jose Consing Jr. argued the International Monetary Fund (IMF) is not asking the corporation to return the P75-billion start-up capital for the country’s sovereign wealth fund which was contributed by the Land Bank of the Philippines (LandBank) and the Development Bank of the Philippines (DBP).

Breaking down the capital for the Maharlika Investment Fund, LandBank infused P50 billion while the DBP transferred P25 billion.

“The IMF did not specifically say that the MIC should return the contribution from the two banks, but that they should recapitalize so they can exit the regulatory relief environment,” Consing said in a radio interview.

The IMF recently released a report which, in its exact words, said “implementing capital restoration plans for two state-owned banks following their contribution to the Maharlika Investment Corporation’s start-up capital and exiting regulatory relief as soon as possible is important.”

However, the IMF report added that “while the establishment of the MIC can help address the country’s investment needs, it should not come at the cost of a resilient financial system, sound regulatory framework, and level-playing field.”

In October 2023, Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. said LandBank and DBP applied for regulatory relief after the enactment of the Maharlika Investment Fund.

“They are providing capital which reduces their equity which may put them non-compliant with our capital requirements. In principle, we can provide forbearance which means to allow them not to comply for a period of time. This is what’s done elsewhere but they will be expected to comply at some point,” he said.

As of last year, LandBank reported its capital adequacy ratio stood at 16.35 percent, higher than the 10 percent minimum requirement by the central bank.

Meanwhile, the common equity tier 1 ratio settled at 15.46 percent, higher than 10.25 percent minimum regulatory requirement.

“The state-run bank maintains a stable and robust capital position, with year-end capital jumping to P266.8 billion on the back of strong profitability. This translates to 27 percent year-on-year growth from P210.6 billion last year,” LandBank said in a statement.

Consing said the MIC will not return the contributions from the two banks as they were already “infused” to the sovereign wealth fund.

He said the proceeds from the Maharlika Investment Fund will be mainly directed to tourism infrastructure, agro-urbanism, renewable energy, and information and communications technology.

The MIC has an authorized capital stock of P500 billion and allows contributions from local and foreign investors in the public and private sectors.