By Kenneth Christiane L. Basilio, Reporter
THE Finance department is likely to continue pushing for the passage of a new charter for the Development Bank of the Philippines (DBP) in the next Congress after the previous proposal was vetoed, the state-run lender’s top official said on Monday.
The bank hopes provisions that would increase its capital stock to P300 billion from P35 billion would be retained in the new bill that would be filed in the 20th Congress as these are a “key part” of the new charter, DBP President and Chief Executive Officer Michael O. de Jesus told BusinessWorld.
“This is up to the Department of Finance (DoF),” he said in an interview on the sidelines of a House of Representatives hearing. “I think they plan to start again, to refile and address all the issues on the veto. I think it will pursue the same one but with revisions and modifications.”
“The [DBP’s] priority is its increased capitalization,” Manila Rep. William “Irwin” C. Tieng, who heads the House banks committee, told BusinessWorld in an interview. “But we will follow the guidance of Malacañang and the DoF regarding the new charter that we will file for the 20th Congress.”
President Ferdinand R. Marcos, Jr. last month vetoed a bill seeking to replace DBP’s 27-year-old charter “due to certain provisions that are either vague or confusing, or conflicting with the Constitution, existing laws, and principles of good governance,” he said in his veto letter to Congress, a copy of which was obtained by BusinessWorld.
The Finance department has pushed for the amendments to DBP’s charter to strengthen its financial position and give it easier access to the capital markets. The proposal approved by the 19th Congress sought to increase the lender’s capital stock to help finance its priority sectors, such as social infrastructure and small businesses.
The bill would have also paved the way for DBP’s listing as it would have allowed the bank to offer up to 30% of its shares to the public, with the National Government mandated to own 70% of its capital stock at all times.
Fitch Ratings said in January that the new charter could help support the state-run lender’s capital restoration following its contribution to the country’s sovereign wealth fund and boost its credit profile.
Mr. Marcos said in his veto letter that the bill’s provision allowing DBP to temporarily appoint directors in its subsidiaries undermines the authority of the Executive over government-owned or -controlled corporations (GOCC) and the standards of accountability and oversight under the GOCC Governance Act. A provision that allows shareholders to vote for the bank’s board members also goes against another provision that authorizes the President to do the same.
He added that the authority granted to DBP to receive dividends from its subsidiaries contradicts the law that requires all GOCCs to remit at least 50% of their annual net earnings to the National Government.
“In addition to encroaching upon a core executive act, the said provisions unintentionally create overreach and duplicity on the scope of the bank’s authority, and the lack of any direction for its implementing rules and regulations render it most vulnerable to abuse,” Mr. Marcos said.
“This lack of clarity could permit a broad range of discretionary acts without sufficient checks and balances, thereby weakening the essential principles of transparency and accountability.”
