Bank Niaga ready for recapitalization step<\/p>\n
JAKARTA (JP): The publicly-listed Bank Niaga said on Thursday
\nit would conduct a rights issue next month to raise funds to
\nfinance its recapitalization plan.<\/p>\n
Vice president Arwin Rasyid said on Thursday that the bank may
\nneed some Rp 3 trillion (US$400 million) in order to boost its
\ncapital adequacy ratio (CAR) to the stipulated minimum level of 4
\npercent.<\/p>\n
Under the government's recapitalization program, Bank Niaga
\nshareholders would provide at least 20 percent of the
\nrecapitalization funds, or about Rp 600 billion. The government
\nwill provide up to 80 percent of the funding.<\/p>\n
Arwin admitted that securing the 20 percent funding
\nrequirement amid the current economic hardship and political
\nuncertainty would be a tough job.<\/p>\n
\"Foreign investors will only come in after the general
\nelection,\" he told reporters at a press conference after the
\nbank's extraordinary shareholders meeting.<\/p>\n
He added, however, that the exact amount of the financing
\nrequirement would be made public after the central bank gives
\nfinal approval to its business plan.<\/p>\n
\"We're completing the revised version of the business plan,
\nand we expect Bank Indonesia to give its approval soon,\" he said.<\/p>\n
The government is requiring all of the country's commercial
\nbanks to have minimum CAR levels of 4 percent. The
\nrecapitalization process has to be completed by the end of March.<\/p>\n
The government is to help recapitalize banks with a CAR of
\nbetween less than 4 percent and minus 25 percent.<\/p>\n
Bank Niaga is reported to have a CAR level of minus 17.36
\npercent.<\/p>\n
CAR is the ratio between risk-weighted assets and equity
\ncapital.<\/p>\n
Thursday's shareholders meeting approved the appointment of
\nfive new commissioners and one director following a major change
\nin share ownership after the Harawi Sekawan Group, a business arm
\nof the country's largest Muslim organization, Nahdlatul Ulama,
\ntook a majority stake.<\/p>\n
Another tough job for Bank Niaga's management is to win a
\nUS$50 million derivative transaction dispute with publicly-listed
\nproperty developer PT Suryamas Duta Makmur.<\/p>\n
The South Jakarta District Court ordered Bank Niaga in
\nDecember, last year, to pay $60 million to Suryamas because of
\nthe bank's failure to comply with $100 million commitment in a
\ncurrency futures contract signed in 1997 before the rupiah
\ntumbled against the dollar.<\/p>\n
Bank Niaga lodged an appeal with the Jakarta High Court
\nrecently, insisting that it was Suryamas which had not paid back
\na $50 million loan dating from July 1997 through a derivative
\ntransaction scheme. The loan matured on July 20 last year.<\/p>\n
\"I'm optimistic that we'll get fair treatment and win the
\ncase,\" Arwin said, pointing out that Suryamas had acknowledged
\nits obligation to Bank Niaga as stipulated in the developer's
\nannual report. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bank-niaga-ready-for-recapitalization-step-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}