The International Monetary Fund (IMF) has emphasized the need for swift capital restoration of state-owned banks following their contributions to the Maharlika Investment Corporation (MIC), the Philippines’ first sovereign wealth fund.
In a report, the IMF highlighted the importance of replenishing the capital of Land Bank of the Philippines (LandBank) and Development Bank of the Philippines (DBP), which provided significant start-up capital to the MIC.
“Implementing capital restoration plans for these banks and exiting regulatory relief as soon as possible is important,” the IMF said. It also stressed that the MIC should support the country’s investment needs without compromising financial system resilience, regulatory standards, or competition.
In 2023, LandBank contributed ₱50 billion, and DBP provided ₱25 billion to the MIC, prompting both banks to seek regulatory relief from the Bangko Sentral ng Pilipinas (BSP). This was due to concerns that their contributions might lead to non-compliance with BSP capitalization requirements for universal banks.
LandBank has an authorized capital stock of ₱200 billion, while DBP’s stands at ₱35 billion. As of September 2024, LandBank ranked as the second-largest Philippine bank by assets at ₱3.185 trillion, with DBP in tenth place at ₱965.438 billion.
Despite the significant capital infusions, both banks reassured depositors of their financial stability. “Depositors are with a bank that is liquid and stable,” said LandBank CEO Lynette Ortiz. Similarly, DBP CEO Michael de Jesus stated, “The ₱25-billion Maharlika contribution will not have an adverse effect on our depositors.”
President Ferdinand “Bongbong” Marcos Jr. signed the Maharlika Investment Fund (MIF) into law in July 2023. The fund aims to use state assets for investment ventures, prioritizing renewable energy, infrastructure, and agriculture.
MIC President Rafael Consing announced in February that the MIF is likely to make its first investment by the end of the year. However, the MIC has faced criticism for lacking detailed investment plans in the power sector and for delays in establishing employee hiring guidelines.
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