BI, Bapepam prepare merger ruling<\/p>\n
JAKARTA (JP): Bank Indonesia Governor J. Soedradjad Djiwandono
\nsaid yesterday that the central bank and the Capital Market
\nSupervisory Agency (Bapepam) are preparing a regulation to
\nfacilitate mergers between publicly-listed banks.<\/p>\n
\"The regulation is necessary to prevent listed banks from
\nbeing controlled by irresponsible people,\" he said after a
\ncentral bank hearing with House Commission VII.<\/p>\n
Soedradjad said that individuals or institutions could easily
\ncontrol the ownership of a bank by taking over the majority of a
\nbank's shares through the stock exchange.<\/p>\n
He said that takeover moves are common in the capital market.<\/p>\n
\"But for banks, such a deal should be carefully watched
\nbecause it could lead to the entry of blacklisted people into the
\nmanagement or ownership of a bank,\" he said.<\/p>\n
The central bank issued a ruling last year prohibiting persons
\nwith criminal records or those with \"negative backgrounds\" from
\nbecoming bank shareholders or executives.<\/p>\n
Jopie Wijaya, an executive with the publicly-listed Steady
\nSafe public transportation company, recently made a surprise move
\nto acquire a 20 percent stake in publicly-listed Bank Papan
\nSejahtera. Jopie, who became the bank's majority shareholder
\nafter the takeover, sold his stake in the bank less than two
\nmonths after he concluded the deal.<\/p>\n
Sources said that the central bank's planned regulation would
\nhelp prevent bank shares from becoming the target of speculation.<\/p>\n
Publicly listed Bank Mashill, according to the sources, also
\nhas plans to merge with Bank Tiara, which is listed on the
\nJakarta Stock Exchange. Execution of the plan must now wait until
\nthe regulation is issued.<\/p>\n
Soedradjad said that the current regulation only covers the
\nmerging of unlisted banks and is designed to encourage small
\nbanks to merge among themselves or with larger banks.<\/p>\n
Small banks, however, reportedly have had difficulties in
\nnegotiating mergers despite incentives offered by the government.<\/p>\n
Riyanto Sastroatmodjo, a former senior official at Bank
\nIndonesia, said that both healthy banks and ones with unsound
\nperformances have had similar difficulties.<\/p>\n
He said that healthy banks are generally reluctant to accept
\nmerger offers from unsound banks for fear of hurting their image
\nand performance.<\/p>\n
\"The sound banks also face a dilemma because shareholders do
\nnot want to lose control of their operations,\" he told a seminar
\non mergers and acquisitions in the banking industry last week.<\/p>\n
The government has issued a number of incentives to encourage
\nmergers in the country's overcrowded banking industry. They
\ninclude tax facilities related to the transfer of a bank's assets
\nin a merger deal and an automatic promotion in status to that of
\nforeign exchange bank. A bank that acquires the assets of a
\nmerged partner, for example, is exempted from paying income tax
\non the transfer of assets in the deal.<\/p>\n
At least 10 banks have unveiled plans to merge with other
\nbanks but have had difficulties carrying out the mergers due to a
\nlack of incentives in having to deal with non-performing loans.
\n(hen)<\/p>",
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