Lippo posts loss ahead of divestment<\/p>\n
M. Taufiqurrahman, The Jakarta Post, Jakarta<\/p>\n
With its public sale scheduled for this month, Bank Lippo
\nannounced on Tuesday that it posted a net loss of Rp 506 billion
\n(US$59 million) in 2002, as compared to a profit of Rp 270
\nbillion in 2001.<\/p>\n
Bank Lippo corporate secretary Widhayati Hendropurnomo told
\nthe management of the Jakarta Stocks Exchange (JSX) that last
\nyear's net loss was partly caused by the bank's operational loss
\nof Rp 265 billion. The previous year the bank posted an
\noperational profit of Rp 304 billion.<\/p>\n
The bank's annual financial report for 2002 showed that its
\nnet income from interest dropped from Rp 1.02 trillion in 2001 to
\nRp 1.01 trillion in 2002.<\/p>\n
Given the net loss, the bank's stockholders had to bear a loss
\nof Rp 129 per share as compared to a Rp 69 profit for 2001.<\/p>\n
The report also revealed that the bank's nonperforming loans
\nincreased by 3.27 percentage points from 9.11 percent in 2001 to
\n12.38 percent in 2002.<\/p>\n
The government, through the Indonesian Bank Restructuring
\nAgency (IBRA), holds a 59.3 percent stake in Bank Lippo and plans
\nto sell a majority stake in June. The divestment is expected to
\nbe completed in October.<\/p>\n
Bank Lippo was issued two warning letters by the JSX for its
\nfailure to submit an annual financial report on March 31 as
\nscheduled.<\/p>\n
Earlier this year, Bank Lippo was put under investigation by
\nthe Capital Market Supervisory Agency (Bapepam) after months of
\npublic outcry over alleged inaccurate financial reports issued by
\nits management, which was alleged to be acting in favor of the
\nbank's former owner -- the Riyadi family.<\/p>\n
Separately, banking analyst Lin Che Wei said that Bank Lippo's
\npoor performance was closely related to the government's plan to
\nsell the bank.<\/p>\n
He said the financial report was somewhat prepared as a
\nprelude for the commencement of the divestment program in June.<\/p>\n
\"This report is the one that will be used as grounds for the
\nplanned divestment of Bank Lippo,\" he told The Jakarta Post.<\/p>\n
The report should be seen from the perspective of the planned
\ndivestment program. The more deflated the book value, the cheaper
\nit will be for a certain party to buy back the bank, he said.<\/p>\n
He also said last year's loss was caused by the fact that Bank
\nLippo had allocated too much funds for the provision of losses
\nfrom loans, something he said was unnecessary given the current
\ntrend of decreasing nonperforming loans.<\/p>\n
Asked if the poor performance could further damage the bank's
\nimage, Che Wei said: \"For now, who really cares about image. The
\nnew owner can mend it later.\"<\/p>\n
The analyst said the 2002 financial report represented the
\nperformance of the bank's previous management.<\/p>\n
\"The question is who should be held accountable for the loss,
\nthe new or old management?\" he asked.<\/p>\n
Bank Lippo's defining moments<\/p>\n
Nov. 28, 2002: Bank Lippo publishes its financial report in the
\nmass media, stating the bank posted a net profit of Rp 99 billion
\nand that it had a 24.8 percent capital adequacy ratio (CAR) as of
\nSeptember 2002.<\/p>\n
Dec. 28, 2002: Lippo submits a second financial report to the
\nJakarta Stock Exchange, saying that the bank recorded a loss of
\nRp 1.27 trillion and had a CAR of around 4 percent over the same
\nperiod as covered by the first report.<\/p>\n
March 17, 2003: The Capital Market Supervisory Agency (Bapepam)
\nimposes a Rp 2.5 billion fine on Lippo management for misleading
\nthe public.<\/p>\n
March 28, 2003: The Ministry of Finance imposes sanctions on
\nthree appraisers and an auditor who conducted an appraisal of
\nLippo's assets and an audit of its financial reports. The
\nsanctions ranged from written warnings to temporary revocation of
\ntheir practice licenses.<\/p>\n
April 15: A shareholders' meeting appoints Joseph Luhukay as the
\nnew president, but retains former controlling shareholder Mochtar
\nRiady as chairman of the board of commissioners, a decision which
\nanalysts say could derail efforts to instill confidence in the
\nbank.<\/p>",
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