Banking industry welcomes central bank's new lending policy<\/p>\n
Leony Aurora, The Jakarta Post\/Jakarta<\/p>\n
Major players in the banking industry have welcomed Bank
\nIndonesia's effort to speed up the sector's consolidation through
\na new policy on the injection of funds into other banks, but urge
\nfor more incentives.<\/p>\n
President director of Bank Negara Indonesia (BNI), the
\ncountry's second largest lender, Sigit Pramono told reporters on
\nWednesday that relaxing of regulations was in line with the
\nsector's wishes.<\/p>\n
\"The push for banks to consolidate and the (previous) legal
\nlending limit (LLL) policy contradicted one another,\" he said.<\/p>\n
The central bank announced on Tuesday its new policy, which
\nrules that money injected from one bank to another would not be
\ncalculated in its LLL, as long as financial reports of the
\ncorresponding banks were consolidated.<\/p>\n
This opens the doors wide for banks to merge and buy other
\nbanks without stumbling on the LLL, which was previously set at
\n20 percent.<\/p>\n
Bank Rakyat Indonesia president Rudjito said the new
\nregulation enabled banks to decide whether to rely on internal
\ngrowth or make other moves, such as acquiring or merging with
\nother banks.<\/p>\n
\"The condition now is more open, more flexible,\" he said.<\/p>\n
The banks have already started eyeing other players to decide
\nwhich is the most suited to partner with.<\/p>\n
Sigit said that BNI intended to acquire one bank this year to
\nadd value to its services before selling 30 percent of its shares
\nin May or June.<\/p>\n
\"(With the acquisition) we expect our value to be better in
\nthe second public offering,\" he said.<\/p>\n
Although the government in principle has approved the
\ndivestment plan, which is expected to raise some Rp 5 trillion
\n(US$547 million), its continuance depends on the House of
\nRepresentatives, Sigit said.<\/p>\n
Last year the House rejected the government's request to sell
\nits shares in BNI to cover the state budget deficit, citing
\nunfavorable market conditions.<\/p>\n
Banks that would be attractive to BRI are those with the same
\nfocus on micro, small- and medium-sized enterprises, said
\nRudjito.<\/p>\n
\"We have not invited partners, but the option is open.\"<\/p>\n
Meanwhile, to further accelerate the banking sector's
\nconsolidation, Sigit called on the government to offer more
\nincentives, saying the government should lower the cost of
\nconverting ownership certificates for assets that change hands in
\na merger.<\/p>\n
\"Foreign countries do this type of thing to promote voluntary
\nmergers,\" he said.<\/p>\n
Another thing to consider is the appropriate time to forecast
\na new bank's financial performance.<\/p>\n
\"Take for instance NPL (nonperforming loans), the figure taken
\nwhen a merger takes place would be very different from that taken
\nafter the whole process is finished.\"<\/p>",
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