The Philippines’ newly appointed finance secretary Ralph Recto has officially scrapped the proposed merger of the Landbank of the Philippines and the Development Bank of the Philippines, the country’s two state-owned lenders. 

“Their mandates are totally different, so I think we’re better off with two of them,” Recto told local reporters. 

Landbank has traditionally served the agriculture sector, while the DBP attends to the needs of the industrial segment.

Had the proposed merger pushed through, Landbank, as the surviving entity, would have become the Philippines’ largest bank with an estimated asset size of about 4.18 trillion pesos (US$74.72 billion) and a deposit base of 3.59 trillion pesos.

However, Recto, who took over the top post at the Finance department earlier this year, says he thinks the country needs two depository banks. 

Recto’s position is directly opposite that of his predecessor Benjamin Diokno, who pushed strongly for the merger, which he said would generate the government some 5.3 billion pesos in savings annually. 

Several Philippine legislators had opposed the proposal, saying in April last year that merging Landbank with the DBP could result in an entity “too big to fail” that could potentially rely on government bailouts in the future. Recto was deputy speaker of the House of Representatives prior to his appointment.

The DBP also opposed the planned merger, saying that a new law would have to be passed to marry the two banks, contrary to Diokno’s assertion at the time that an executive order was enough to go ahead with the merger.