January 3, 2025 | 12:00am
MANILA, Philippines — The Department of Finance (DOF) has commended the Land Bank of the Philippines (Landbank) and the Development Bank of the Philippines (DBP) for maintaining robust financial positions, despite their contributions to the Maharlika Investment Fund.
In a statement, the DOF said both state-owned banks have consistently exceeded the Bangko Sentral ng Pilipinas (BSP)’s capital adequacy ratio (CAR) requirements, a key metric of financial health.
As of November last year, Landbank said it has a CAR of 16.42 percent, while DBP posted 14.78 percent, both well above the 10 percent regulatory threshold.
“The solid financial footing of Landbank and DBP reaffirms their indispensable role in advancing the nation’s progress,” Finance Secretary Ralph Recto said.
“This allows them to continuously adhere to prudent financial management practices and effectively utilize their resources to deliver more support to Filipinos, especially in key sectors like infrastructure, agriculture, fisheries, micro, small, and medium enterprises and many more,” he said.
The International Monetary Fund earlier urged the two banks to exit their regulatory relief measures as soon as possible following their contributions to the startup capital of the Maharlika Investment Corp. (MIC).
It is also crucial to implement capital restoration plans for two state-owned banks as establishing the MIC should not come “at the cost of a resilient financial system, sound regulatory framework and level-playing-field.”
In September 2023, the two banks remitted its contributions to the MIC, which had an authorized capital stock of P500 billion. Under the law, Landbank and the national government were mandated to initially contribute P50 billion each and DBP with P25 billion.
The BSP previously said that the significant capital contributions made by Landbank and DBP – totaling P75 billion – had strained their liquidity positions, which might make them non-compliant with regulatory capital requirements.
To further enhance the financial resilience of Landbank and DBP, the DOF is advocating for amendments to their respective charters.
Among the proposed reforms is enabling the banks to access private capital by offering a portion of their shares to the public. Both banks are also proposed to increase their authorized capital stock offering to the public.
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