MANILA, April 1 (Reuters): Philippines President Ferdinand Marcos Jr is pushing for the merger of two state-run banks, which will create the country's largest lender by assets, his finance secretary had announced this week.
The planned merger, first approved by President Benigno Aquino in 2016 but scrapped later that same year by his successor Rodrigo Duterte, was revived "due to recent financial developments abroad," Finance Secretary Benjamin Diokno told a media briefing.
The merger of Development Bank of the Philippines (DBP) and Land Bank of the Philippines (LBP) would also be in line with past government efforts for consolidation in the banking sector.
"The merger will create a bigger and stronger bank to better serve the country's development needs," Diokno said.
The global banking sector has been in turmoil since the collapse of two mid-sized U.S. banks earlier this month, which prompted a rout in banking stocks and led to a takeover of 167-year-old Credit Suisse by its Swiss rival UBS.
The union of DBP and LBP would allow the government to save more than 5 billion pesos ($91.93 million) in operating costs in the first year of their merger, Diokno said. It could be done through an executive order or by legislation, he added.
As of end-September, the two banks had combined assets of 3.8 trillion pesos, compared with 3.7 trillion pesos of BDO Unibank, which is controlled by the Philippines' richest family, central bank data showed.
Central bank Governor Felipe Medalla has given assurances that the local banking system remains strong. ($1 = 54.39 Philippine pesos) - Reuters