IBRA denies Bank Universal, BCA merger rumor<\/p>\n
JAKARTA (JP): Indonesian Bank Restructuring Agency (IBRA)
\nChairman Edwin Gerungan denied on Tuesday rumors that the agency
\nwould merge Bank Universal with Bank Central Asia (BCA).<\/p>\n
Edwin said that merging the two publicly-listed banks was
\nunviable as the agency planned to sell its majority stake in BCA
\nin the near future.<\/p>\n
\"It is impossible to merge (Bank Universal) with BCA,\" he said
\nfollowing a meeting with senior economic ministers.<\/p>\n
Edwin declined to name any banks that would potentially be
\nmerged with Bank Universal, pointing out that negotiations were
\nstill being held.<\/p>\n
He did confirm, however, that a merger of banks under the
\nsupervision of IBRA would take place this year to meet the year-
\nend minimum 8 percent capital adequacy ratio (CAR) requirement.<\/p>\n
Edwin was responding to reports claiming that IBRA was
\nplanning to merge Bank Universal with BCA.<\/p>\n
Other reports suggested that Bank Universal would be merged
\nwith the publicly-listed Bank Danamon.<\/p>\n
IBRA, a unit under the finance ministry, holds majority
\nownership in 11 private banks following the government's massive
\nbailout program in 1998 and 1999. The IBRA banks include BCA,
\nDanamon, Universal, Bank Niaga, Bank Internasional Indonesia,
\nLippo Bank, Bank Bali, Bank Bukopin, Bank Prima Express, Bank
\nArtha Media and Bank Patriot.<\/p>\n
The agency sold around 22.5 percent of BCA last year via an
\ninitial public offering and plans to sell another 40 percent
\nduring July or August.<\/p>\n
IBRA also plans to offload around 51 percent of publicly-
\nlisted Bank Niaga in the near future.<\/p>\n
Bank Indonesia has recently said that there were at least
\nthree banks under IBRA which might not be able to meet the 8
\npercent CAR requirement by the end of this year. The central bank
\ndid not name the banks, but said that a merger could be less
\ncostly than having to recapitalize them or close them down.<\/p>\n
Minister of Finance Prijadi Praptosuhardjo, however, recently
\nsaid that the government would not decide to merge banks based
\nsolely on their CAR condition. He said that the banks' liquidity
\nand asset size would also be considered.<\/p>\n
\"We will not merge two banks that cannot look forward to good
\nsynergy. Mergers are actually just one alternative to resolve the
\n(banking) crisis,\" Prijadi said.<\/p>\n
The government issued a massive Rp 430 trillion in bonds to
\nhelp finance the recapitalization of some 27 ailing domestic
\nbanks, including state banks. The state budget covers interest
\npaid on the bonds.<\/p>\n
But as domestic interest rates continues to move higher some
\nbanks are facing the risk of further financial bleeding that
\ncould force the government to launch a second recapitalization
\nprogram and in turn create a greater burden on the already
\nstrained state budget.<\/p>\n
Bank Indonesia has said that, in addition to the three IBRA
\nbanks, there were some 17 non-IBRA banks which might not be able
\nto meet the year-end CAR requirement.<\/p>\n
The banks' owners must either inject fresh capital or merge
\nthe banks with healthier ones to avoid closure.(rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/ibra-denies-bank-universal-bca-merger-rumor-1447893297",
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