Landbank wants charter changed to allow entry of outside investors

The Land Bank of the Philippines (Landbank) plans to ask Congress to pass a law that would amend its charter and allow it to take in new financial partners to help strengthen the bank’s capital base.

Landbank president and chief executive officer Gary B. Teves said there is a need to increase the bank’s financial stamina which has to maintain its dual tasks of carrying out its mandate to provide credit to the high-risk agriculture sector while ensuring the bank’s profitability.

"It’s a tough balancing act and yet, we have a constraint, we cannot even invite investors because our charter does not allow us to do so," Teves said, adding the bank, which ranks among the country’s top five banks in terms of performance and resources, has to keep up with competition.

Teves said Landbank management is still working out the proposal which will be submitted to Congress for approval in two to three months.

"We are still in the process of giving flesh to the proposal but clearly, we have to modify our charter by means of legislation to allow us to invite investors," Teves said.

Teves explained that prospective investors will be limited to institutions that have a similar mandate as Landbank’s or share the government financial institution’s philosophy.

"This is one way to ensure that we do not veer off course from our primary task of extending credit to the agri-agra sector," Teves said.

In a press briefing last month, Teves said there is increasing pressure on Landbank’s financial resources especially if the number of land claims under the government’s Comprehensive Agrarian Reform Program (CARP) goes up.

Under the law, Landbank advances the bulk of the financial requirements of CARP. It grants financial and technical support to beneficiaries and compensates landowners whose lands were acquired by government for redistribution to qualified beneficiaries.

Last year, Landbanks’ cash advances for CARP went up to P3.044 billion from P1.5 billion during the same period in 2001 because of higher land valuation.

The Landbank estimated that for 50,000 hectares of land, it will require P5.6 billion to pay landowners. This year, the Department of Agrarian said it plans to distribute at least 100,000 hectares which would need P7.1 billion.