THE Development Bank of the Philippines (DBP) announced plans to increase its authorized capital to P100 billion citing the move would boost its ability to lend to businesses deeply-affected with the economic recession.
The state-run bank said this move is aligned with its lobby to amend its charter in a bid to further the recovery efforts amid the economic slump, according to DBP President and CEO Emmanuel G. Herbosa.
The proposed capitalization is nearly triple its current P35 billion in the books.
“The proposed amendments to the DBP Charter would be a boon to our efforts to undertake more developmental projects especially in the countryside, where these types of economic interventions are most sorely needed,” Herbosa was quoted in a statement as saying.
The DBP said it is working with the Department of Finance, state regulators and legislators to introduce said amendments.
It was in 1998 when the bank’s charter was last amended through Republic Act (RA) 8523, raising its authorized capital to P35 billion from P5 billion. The state-run financial institution was originally founded as the Rehabilitation Finance Corp. to aid economic recovery following World War II.
Herbosa said that the proposed measure is currently pending for deliberation with the House of Representatives’ Committee on Banks and Financial Intermediaries.
Meanwhile, he expressed hope that a counterpart bill will be filed before the Senate to accelerate the passage of the charter amendments before Congress goes into a break in preparation for the national elections in 2022.
“We pledge our full support and cooperation to our legislators and policy-makers in our collective efforts to strengthen DBP’s charter to make it more relevant and responsive to the demands of an ever-changing market and rapidly-evolving economic landscape,” Herbosa said.
DBP Senior Vice President for Legal Services Group Soraya F. Adiong said that the capital hike and proposed amendments would allow the bank to offer a bigger menu of financial products and services and enhance compliance with risk-based banking laws and regulations.
Adiong said that the new charter “would also bolster existing governance mechanisms, tighten sanctions and penalties for specific violations and provide greater operational and organizational flexibility for the bank.”
This year, DBP is eyeing to finance P314.547-billion worth of loans to key sectors, including the infrastructure and logistics sector; social services; and environmental projects such as renewable energy resources, public water systems and waste management, among others.
The bank, Herbosa said, is sourcing its funds for the loans from P12.5-billion worth of additional equity under RA 11494, in addition to deposit liabilities and bank borrowings.
As of end-September 2020, the DBP official said that 94.63 percent of the bank’s funding sources came from deposits from government and private sources, non-ODA (official development assistance) borrowings, subordinated debt and dollar senior notes. The remaining 5.37 percent came from ODA borrowings.
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