Nationalist People’s Coalition (NPC) Congressman Win Gatchalian has assailed the planned merger of two state-run banks, namely the Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP), saying such move is counterproductive and will hold local government units “hostage”.

“I oppose the merger of LBP and DBP because it will create a monopoly for local government accounts since they are the dominant government financial institutions that can lend money to LGUs​,” said Gatchalian, a majority member for the House Committee on Local Government.

Gatchalian said the fusion of the two state banks would not only kill competition but also leave LGUs trapped as there will only be one major​ financier for development projects in cities and municipalities.

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“Merging the two banks will lead to inefficiency and uncompetitiveness for the LGU accounts. The LGUs will be held hostage by this monolithic bank,” said Gatchalian, whose three mayoral terms brought the awarding of the Seal of Good Housekeeping to Valenzuela City by the Department of Local and Interior Government eventually in 2012.

Land Bank describes itself as the “biggest credit provider to small farmers and fishers, local government units, and the biggest lender to microenterprises and SMEs among government financial institutions.”

The DBP, meanwhile, is primarily tasked “to provide banking services principally to cater to the medium and long-term needs of agricultural and industrial enterprises with emphasis on small and medium-scale industries.”

President Aquino has already questioned the merger of the two financial entities as he refused to sign a draft executive order allowing such union.

Aquino reportedly quizzed bank executives of their plan to put a number of bank employees out of work due to redundancy despite expressing the desire to expand the unified bank’s operations.

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“You wanted to make the bank bigger, but why are you laying off employees?” the President was quoted as saying.

Justice Secretary Leila de Lima underlined the obvious lack of approval of the planned merger by the Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corporation (PDIC).

Deputy BSP Governor for the Supervision and Examination Sector Nestor A. Espenilla Jr. said there was no preceding review by his office of the proposal, saying he does not think the BSP received a formal application.

The chair of the House committee on banks and financial intermediaries has pushed for the green-lighting of the measure merging the two banks, with Land Bank as the surviving entity. The lawmaker believes a consolidated bank will be more efficient and competitive as foreign banks are expected to compete with local ones this year, when the ASEAN integration will occur. (Monica Cantilero)