The Development Bank of the Philippines (DBP) is now undergoing restructuring to make it more attuned to its role as the government’s main public infrastructure financing arm. In fact, government records show that even prior to the Duterte administration stepping down, it had already set into motion plans to slash down DBP’s current personnel.
From as high as 5,241 filled positions, the available slots will now be reduced to just 3,624. According to a recent Governance Commission for GOCC (GCG) memorandum, this restructuring could result in massive yearly savings for the state-run lender.
“Using as reference the personal services (PS) cost for 5,241 positions amounting to P5.8 billion, the resulting staffing under the restructuring will reduce cost by P698.9 million. However, actual PS cost for a total of 3,161 filled positions amounting to P4.5 billion is still lower compared to the P5.1-billion expected cost if staffing under the restructuring will be implemented (filled positions plus critical vacant positions),” read GCG Memorandum No. 2022-03 entitled, ‘Restructuring of the Development Bank of the Philippines,’ which was issued last June 20, 2022.
The memorandum was signed by then GCG Chair Samuel Dagpin Jr., Commissioner Marites Doral, OIC Commissioner Jaypee Abesamis, as well as former Finance Secretary Carlos Dominguez III, and ex-budget Officer-in- charge Tina Rose Marie Canda. Dominguez and Canda had both served as ex-officio members of the GCG under former President Rodrigo Duterte.
The DBP’s restructuring came at the back of challenges it identified in its operations, such as the need to expand its reach, which was made more urgent by the prolonged COVID-19 pandemic; the outbreak of global hacking incidents, which entailed beefing-up information technology (IT) systems; as well as some “disadvantages of being a government financial institution (GFI),” so much so that “top management have found it difficult to steer the company to a common strategy.”
“DBP faces stringent rules and regulations when it comes to disposal of assets, repayments, and financing, which leads to higher transaction costs and longer turnaround times,” the GCG memo said.
Also, “the DBP’s complex and broad mandate allows room for different views and directions (such as corporate banking, development banking, micro, small and medium enterprise, lending and branch expansion),” it stated further.
According to the GCG, Dominguez’s earlier pronouncements urging DBP to “serve as the infrastructure bank for the government’s ‘Build, Build, Build’ program and to administer the loan administration of the Municipal Development Fund present more revenue opportunities.”
“Stronger social marketing as an infrastructure bank and better leadership stakeholder engagement with key government agencies (such as the Department of Finance, the Department of Trade and Industry, the Department of Public Works and Highways, and the National Economic and Development Authority) may lead to more significant revenue streams or earnings for the company,” the GCG added.
In particular, the restructuring has reduced DBP’s corporate services sector, which currently employs the biggest number of personnel at 2,417 positions, to just 414. Given the pandemic-induced digitalization challenges and emerging opportunities in infrastructure financing, the restructuring plan will allow for the addition of a development and resiliency department as well as an ICT sector to the DBP for the first time.
Last February, Dominguez said the next administration may consider merging DBP with a larger bank.
For Dominguez, the new administration may “really have to review the viability of DBP on its own”—a turnaround from the Duterte administration’s previous stance, to the point of stopping the executive order (EO) issued by former President Benigno Aquino III that should have merged DBP and the also state-run Land Bank of the Philippines in 2016.
During the Duterte administration’s first year in office, the GCG stopped the implementation of Aquino’s Executive Order (EO) No. 198, which should have seen the Philippines’ second-biggest bank in terms of assets challenging local tycoons’ dominance in the banking sector.