Bank Global plans rights issue to boost capital<\/p>\n
JAKARTA (JP): Publicly listed Bank Global plans a rights issue
\nin the second semester of this year to strengthen the company's
\ncapital structure.<\/p>\n
Company president Irawan Salim said on Tuesday that the rights
\nissue was expected to raise Rp 200 billion (about US$23.5
\nmillion) in fresh funds.<\/p>\n
He said the company expected shareholders to approve the plan
\nwithin the next two months.<\/p>\n
\"Proceeds from the rights share issue will be used to increase
\nBank Global's paid-up capital from its current level of Rp 90
\nbillion,\" he said at a media gathering.<\/p>\n
Irawan said that Bank Global's total assets were worth Rp 500
\nbillion with paid-up capital of Rp 90 billion as of the end of
\n1998.<\/p>\n
\"Despite the crisis, we managed to book a profit due to our
\nconservative approach,\" he said, saying the bank recorded a gross
\nprofit of about Rp 3.9 billion last year.<\/p>\n
He said that the bank's third party funds (deposits) jumped by
\n280 percent to Rp 406 billion at the end of 1998 from the same
\nperiod in 1997, due to a sharp increase in the number of new
\ndepositors.<\/p>\n
Bank Global was placed by Bank Indonesia, the central bank, in
\ncategory A, according to the soundness of its capital structure.
\nIrawan said the bank's adequacy ratio (CAR) was 21.36 percent in
\nSeptember, far above the minimum 4 percent level that must be
\nreached by banks this year.<\/p>\n
CAR is the ratio of paid-up capital to risk-weighted assets.<\/p>\n
\"Indonesians are more selective nowadays in choosing banks to
\ndeposit their money. Our good reputation attracts people although
\nwe offer relatively small interest rates compared to other
\nprivate banks,\" he said.<\/p>\n
\"We have received more than 500 new customers per month, most
\nof them are former customers of banks placed in category B or
\ncategory C, and also from the now defunct banks.\"<\/p>\n
Banks listed in category A are those with CAR higher than 4
\npercent, which do not require government assistance, category B
\nbanks are those with CAR between 4 percent and minus 25 percent,
\nand are eligible to join the government-sponsored
\nrecapitalization program. Banks that cannot raise their CAR to
\nabove the minus 25 percent cutoff level face closure.<\/p>\n
Irawan also said that the increase in the number of customers
\nhas forced the company to recruit more employees and open new
\nbranch offices.<\/p>\n
He said the bank's total credit stood at Rp 180 billion as of
\nthe end of 1998. Most of the loans were issued to small and
\nmedium-sized businesses in urban centers throughout West Java.<\/p>\n
\"We have no plans to expand our business to corporate banking
\nbecause the sector is proven to have bigger risks than small and
\nmedium businesses and retail banking,\" he said. (gis)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bank-global-plans-rights-issue-to-boost-capital-1447893297",
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