THE PROPOSED HIKE in Development Bank of the Philippines’ (DBP) capital stock to P300 billion from P35 billion will help it fund more state projects to boost the economy, its top official said.
“Other banks in our country have much more capital than we do,” DBP President and Chief Executive Officer Michael O. de Jesus said during a Senate banks committee hearing on a bill that seeks to amend its charter. “The more capital we have, the more we can finance, do business, and promote development in the country.”
“As a general rule, when there is more capital in the bank, it has more resources to lend out money to be able to comply more with its mandate to finance development projects,” Mr. De Jesus added.
End-2023 data from the DBP discussed during the hearing showed 55% of the bank’s loan portfolio went to the infrastructure and logistics sectors, with 21% being allocated for social projects such as social services, public education and healthcare.
Under Senate Bill No. 2761, which Senate President Francis “Chiz” G. Escudero filed this month, the National Government shall own 70% of the total outstanding capital stock of DBP at all times. Meanwhile, P32 billion or 10.67% of the authorized capital stock of the bank, shall be subscribed to and fully paid by the National Government.
“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 as may be necessary to attain the objectives of this Charter, and may allocate part or all of the bank’s unrestricted retained earnings towards paying for the increase in capital,” it said.
The amended DBP Charter will also let the bank conduct an initial public offering to expand its resources to increase financing for its mandated sectors.
The bill also expands DBP’s mandate to include the development of infrastructure; expansion of businesses, particularly micro, small, and medium enterprises; and education, healthcare, housing, and the environment.
It seeks to grant the state-run lender a “perpetual” corporate existence and give two seats in its board to ex officio members from the Department of Finance and the National Economic and Development Authority, with the President appointing the seven other board members.
Senator Mark A. Villar, who heads the committee, backed the proposal to raise DBP’s capital stock.
“It is crucial that our institutions are equipped with proper funding that will enable them to pursue growth initiatives which in turn will help expand local capital markets and create more opportunities for the public and private sectors to access development financing,” he said at the same hearing.
“Amending the DBP Charter will lead to an increase in funds to assist the government in pursuing economic growth and development, promoting economic empowerment and inclusivity…”
Mr. Villar referred the measure to a technical working group to refine it before it is sponsored before the Senate plenary. — J.V.D.Ordoñez
