THE House Committee on Banks and Financial Intermediaries is now finalizing the passage of a bill reorganizing the Land Bank of the Philippines, including privatization of a third of its common shares.
Quirino Rep. Junie Cua, the panel chairman, said House Bill 10440 will further redefine the roles of the LandBank in supporting the government’s sustainable development agenda. This, he said, requires a standalone legal and operational framework for the bank.
“This policy initiative seeks to amend the LandBank Charter that will place the bank in a stronger position to pursue further the policy thrusts of the NG [national government] especially on countryside development, while sustaining its institutional viability amid a highly competitive banking industry,” said Cua following the recent filing of the bill .
The House Banks committee on Wednesday started deliberating the proposal. The committee targets to approve the bill next week.
According to Cua, this policy reform will also bolster its existing corporate and risk governance mechanisms that will drive greater operational efficiencies and enhance the bank’s organizational agility to elevate its financial inclusion initiatives.
“In the exercise of the LandBank’s mandates, certain powers and functions shall be modified that would allow the bank to boost its capital-raising capabilities, sustain and foster a competitive manpower pool, and streamline its banking processes to keep pace with the developments in the market,” he said.
“The proposed amendments are imperative to reinforce not only the benefits of all agricultural stakeholders across the entire agribusiness value chain and all other economic
segments, but also the advantages at the national level to help promote fiscal sustainability and reinvigorate the country’s financial system,” he added.
Cua said this initiative will also address the change in the bank’s role in agrarian reform.
To date, he noted, LandBank plays a crucial role in economic recovery efforts from the Covid-19 pandemic through various policy interventions such as Bayanihan I and II laws.
Relatedly, Cua said the bank has consistently complied with the Agri-Agra Law, which requires all banking institutions to allot 15 percent of their total lending portfolio for agriculture loans and 10 percent for agrarian reform credit.
As of December 2020, he said the bank’s compliance reached 76.95 percent and 11.52 percent for agricultural and agrarian reform loans, respectively.
Also, the bank’s agriculture lending has consistently grown from P222.05 billion in 2018, to P236.31 billion in 2019, and P237.62 billion in 2020.
At the Banks committee hearing on Wednesday, LandBank President and CEO Cecilia Borromeo said this landmark legislation will elevate the bank’s mandate to bring the unserved and underserved into the national economy.
“Amending the LandBank Charter to institute a standalone legal and operational framework for the bank will place it in a stronger position to pursue further the developmental objective of the bank while keeping up with a constantly shifting financial landscape, sustaining its institutional viability amid a highly competitive banking industry,” Borromeo said.
“The proposed amendments to the Charter shall enhance its function to allow the bank to boost its capital-raising capabilities, sustain a competitive workforce and streamline its banking processes,” she added.
The bill says the capital stock of the bank shall be P200 billion divided into P2 billion common shares with a par value of P100 per share, which shall be fully subscribed by the national government.
The bill said the board, upon the recommendation of the Secretary of Finance and with the approval of the President of the Philippines, may increase the capitalization of the bank up to such an amount necessary to attain the objectives of the Charter.
The bank shall have the power to offer and issue common and preferred shares of stocks in such manner and in such quantities as approved by the Finance secretary upon the recommendation of the Board of Directors and aligned with applicable laws, rules and regulations.
However, the national government shall maintain, at all times, at least two-thirds ownership of the total outstanding common voting shares of the bank. Outside of the national government, no individual or group shall vote more than 5 percent of the total outstanding capital stock.