DoF considering IPOs for LandBank, DBP

Merkado Barkada

February 26, 2024 | 8:00am

The Philippine News Agency reported that the Department of Finance (DoF) [link], under new Secretary Ralph Recto, is “exploring amendments to the charters of the Land Bank of the Philippines (LandBank) and Development Bank of the Philippines (DBP)”, which Mr. Recto said could include “their possible public listing, to broaden the local capital market.” No timelines on the charter amendment process or the subsequent IPO transactions were given. 

MB bottom-line: I’m curious about the purpose of this kind of IPO. From the perspective of the DoF, a couple of blockbuster banking IPOs could attract a good deal of new foreign investment capital into the Philippine capital markets. From the banks’ perspective, assuming the IPOs were primary shares, the transactions would bring in a good deal of fresh capital that could be used to expand their loan portfolios. The cash might also help replenish their financial statements after they were forced by law to remit P75 billion (LandBank gave P50 billion; DBP gave P25 billion) as seed capital to the Maharlika Investment Fund. From the local investor’s perspective, I’m not exactly sure what this offering would do. Local bank stocks have been doing very well and multiples are expanding, but our last “forced by law to IPO” bank offering was Bank of Commerce [BNCOM 6.30, up 0.6%], which is currently down 48% from its March 2022 price of P12.00/share. Worth watching, but this still feels quite far away.

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