THE DEVELOPMENT Bank of the Philippines (DBP) will again request for regulatory relief this year as it seeks to boost its capital position.

“Just for comfort, we will seek regulatory relief. The same regulatory relief we sought last year,” DBP President and Chief Executive Officer Michael O. de Jesus told reporters late on Friday.

“Even though I said we will meet all the capital ratios, we still would seek comfort.”

The DBP is currently working with the Bangko Sentral ng Pilipinas (BSP) on this request, he added.

The DBP and Land Bank of the Philippines (LANDBANK) had sought regulatory relief from the central bank following their contributions to the Maharlika Investment Corp. (MIC).

DBP and LANDBANK were mandated to contribute P25 billion and P50 billion, respectively, as the initial seed capital for the MIC. The state lenders remitted their contributions in September 2023.

“It’s annual. Some ratios are for four years, some are every year. There are like three, so the annual, we will seek relief for that, the capital adequacy ratio (CAR), I think,” Mr. De Jesus said.

In a recent report, the International Monetary Fund (IMF) called for the restoration of capital for the two state banks after their contributions to the Maharlika fund.

The IMF noted the importance of capital restoration and exiting regulatory relief “as soon as possible.”

However, Mr. De Jesus assured that the bank will meet its capital requirements and book a higher net income for 2024 compared to the year prior.

“This year, you will see, we will meet all the minimum capital ratios based on the results of 2024. Having said that, we need to increase our capital. There’s no question.”

“That’s why we’re working with the Congress now on the amendment to the DBP charter,” he added.

The Senate bill seeking to amend the DBP’s charter was approved on final reading in September, while the House version is still up for second reading approval. Under the measure, the bank’s authorized capital stock will be raised to P300 billion from P35 billion.

“We will meet the minimum, but of course we don’t just want to meet the minimum, we want to exceed it, so we need to increase our capital. I’m not saying it has to be done this year, but over time,” he added.

“Increasing the authorized capital is good. The charter hasn’t been amended in more than 30 years. This would be very good for the institution, so we can fulfill our mandate of developmental banking.”

The new charter would also allow the state bank to conduct an initial public offering (IPO). However, Mr. De Jesus said DBP is unlikely to go for an IPO this year. 

“Definitely not this year. Before you tap the markets, you want to increase the value, make sure it’s run well.”

The DBP will also be requesting for dividend relief this year, Mr. De Jesus said.

“We’ll also seek that for this year. Every year. We’ve been doing that dividend relief for the past, I think six, seven years so we can build our capital. We seek that from Malacañang.”

In 2023, President Ferdinand R. Marcos, Jr. signed an executive order exempting both banks from their dividend obligations as compensation for providing seed capital to the MIC.

LANDBANK: NO NEED FOR EXTENSIONMeanwhile, LANDBANK said it is not planning to request for an extension of regulatory relief.

“We have had a discussion before that the regulatory relief was actually good for two or three years and that was really viewed from our perspective as a buffer,” LANDBANK President and Chief Executive Officer Lynette V. Ortiz told reporters on Friday.

She said there is “no need” for the relief extension amid the bank’s sound financials.

“We have no need for that, and this is despite the P32 billion of dividends that we remitted to the government just last year. All of that was taken into consideration — P50 billion of Maharlika, P30 billion of dividends. And if you see the financials, of course, you still meet our Common Equity Tier 1 and CAR.”

She also noted that the state bank made “decent” income this year.

“This year, we’ve also done a lot of assessments around risks, risk management. Our balance sheet is very prudent and so we’ve had to ensure that our risks, our provisions, are done well and sufficient.” 

“The numbers relative to the year before are slightly lower. But if you look at it line by line, our loans, our investments, remain very strong.”

The bank is also looking to tap into the debt markets this year, with a special focus on sustainability.

“What we’d like actually is to really further grow our green portfolio, our sustainability portfolio, and we want to match it with bonds that are either green, blue, or sustainable,” she added. — Luisa Maria Jacinta C. Jocson