President Rodrigo Roa Duterte’s threats to abolish the Landbank of the Philippines ostensibly for “not financing agricultural enterprises” had this corner wondering where he sourced his data because it certainly didn’t sound like it came from the Secretary of the Department of Finance, Carlos “Sonny” Dominguez, who sits as chairman of Landbank.
The day after PRRD’s 4th State of the Nation Address during which he slammed Landbank for engaging in commercial banking and not financing agri enterprises, Secretary Dominguez commented that what the President saw as a solution to the supposed problem “is not as simple as that.” Secretary Dominguez defended Landbank saying that as the number 4 universal bank in the country in terms of consolidated assets, LBP leads the pack in extending assistance to the agri sector.
The threat to abolish Landbank because it is giving privately-owned commercial banks a run for their money sounds bizarre.
To better understand the issue, may I trace Landbank’s history and mandate through its website. LBP was born in 1963 by virtue of RA 3844 also known as the Agricultural Land Reform Code. Its chief mandate then was to finance the acquisition and distribution of agricultural estates for division and resale to small landholders as well as the purchase of the landholding by the agricultural lessee. Authorized capitalization was at P1.5 billion and initial capital was P200 million.
Because it was found to be “deficient and inadequate both in capitalization and organizational structure to meet the demands of agrarian reform, LBP was revitalized through Presidential Decree 251.”
The Marcos decree revitalizing Landbank “granted universal or expanded commercial banking powers to LBP as the universal bank with a mission of spurring countryside development. The expanded powers to include lending to agricultural, industrial, home-building and home-financing projects and other productive enterprises are meant to insure LBP’s financial stability and sustainability.” In February 1995, by virtue of RA 7907 the LBP Charter was amended increasing authorized capitalization to P9 billion and established the bank as official government depository.
Quite simply, the bank’s commercial transactions are part of its mandate because it cannot expect to accomplish its social mission if it relied only on granting loans to farmers and fisherfolks – referred to by the financial sector as unbanked, people who don’t go to banks for loans but instead depend on Turkos, slang for loansharks for their financial needs. Turkos are popular because their loan releases are fast and do not require collateral.
As an advocate of co-operatives, I had the privilege to interact with the past President and CEO of Landbank, Madam Gilda E. Pico. This was in October 2015 when I covered the Cebu leg of the bank’s roadshow that gave recognition to the men and women behind successful co-operatives and social enterprises. The event was like the Oscars of Landbank clients whose achievements and best practices were featured in the book, “Harvest of Heroes.”
In the sidelines of the event, I interviewed Maria Elena Limocon and Delfin Tuquib of Lamac MPC, Pete Delantar of Nature’s Legacy, Ramir Bonghanoy of Bon-Ace, Lito and Fe Barino of Duros Development Corporation among honorees cited in the book.
They were all grateful to Landbank for accompanying them through all stages of their endeavors not only through formal lending services but also with morale-boosting words when the going went rough. The honorees were one in saying that the bank’s support for financial inclusivity in the countryside “went beyond lending.”
The other point of PRRD’s concern which I think will have Congress or even the Cabinet taking the cudgels for the state-owned bank is that Senate has oversight powers over LBP so that it cannot go slack on its sworn duty without risking the ire of the Upper Chamber. Many times I heard Senator Cynthia Villar, chair of the Senate Committee on Agriculture and Food saying that as conduit of agri funds, she’s closely monitoring LBP. I think if there are issues, she would have summoned the officers to a legislative probe long time ago.
Moreover, figures don’t lie.
We’re just entering the 3rd quarter but LBP already made a profit of P4.75 billion for the first quarter according to a report by CNN. The profits were drawn mainly from P778.8 billion in total loans. Already, some P13 billion loans were released to small farmers and fisherfolks from January to March 2019. The conduit of these loans are co-operatives. Outstanding loans to small farmers and fisherfolks stand at P45.3 billion, while P111.7 billion in outstanding loans has been released to startups and SMEs.
Fortunately, Landbank is not lacking in admirers within the industry here and in the Asia Pacific region.
The Bangko Sentral Ng Pilipinas recently cited Landbank as the most outstanding lending bank for the Credit Surety Fund, a BSP designed lending facility for coops and micro enterprises. In addition, LBP was awarded as the “Digital Trailblazer in Financial Services.” Early this year, the bank was named “Asia’s Most Inclusive Bank” at the 2019 Financial Insights Innovation Awards in Singapore. The citation recognized Landbank’s “best-in-class technology initiatives” among financial institutions in Asia and the Pacific.
For doing a splendid job, Landbank deserves commendation.
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