One-stop service for bank mergers to be established<\/p>\n
JAKARTA (JP): A one stop service center will soon be
\nestablished to assist banks merge and meet the new minimum
\ncapital requirement, a government official said yesterday.<\/p>\n
Director General of Tax Fuad Bawazier said yesterday that
\nbanks planning to merge could request free assistance from the
\ncenter to help arrange the permits required from various
\ngovernment offices.<\/p>\n
Fuad, who has been tipped as the next finance minister, also
\nsaid that the center can help appoint accountants and appraisal
\ncompanies for the merger process.<\/p>\n
\"The idea for the center came from members of Perbanas,\" he
\ntold journalists following a two-hour gathering with central bank
\ndirectors, key officials from Indonesia's private banks
\nassociation (Perbanas) and government officials.<\/p>\n
Chairman of Perbanas, A. Subowo, said that at least 35 of the
\n184 banks affiliated to the association had stated an intended to
\nmerge. He did not provide further details.<\/p>\n
Bank Indonesia has set a tough minimum capital requirement for
\nprivate banks. A minimum of Rp 1 trillion in paid-up capital must
\nbe held by the end of this year. The minimum capital requirement
\nwill rise to Rp 2 trillion by the end of 2000 and to Rp 3
\ntrillion by the end of 2003.<\/p>\n
Previously, capital requirements were Rp 150 billion for
\nforeign exchange banks and Rp 50 billion for non-foreign exchange
\nbanks.<\/p>\n
The central bank expects those banks which do not fulfill the
\nrequirement alone to merge with other domestic banks or invite
\nforeign investors.<\/p>\n
Fuad confirmed that two overseas banks had expressed an
\ninterest in acquiring domestic banks but he declined to
\nelaborate.<\/p>\n
However, he said that domestic banks had realized the wisdom
\nof merging, because banks will need strong capital, and good
\nmanagement and technology to survive in the global era.<\/p>\n
\"Even banks which already have more than Rp 1 trillion in
\npaid-up capital have stated plans to merge,\" he said.<\/p>\n
Fuad arranged yesterday's gathering in his capacity as an
\nofficial in the economic and finance resilience council, which
\nwas formed by President Soeharto to deal with the country's
\neconomic crisis.<\/p>\n
The crisis, which began last August, has highlighted the
\nimportance of consolidating the country's banks, who are plagued
\nby mounting bad debts, poor capital and weak management.<\/p>\n
Indonesia has 212 commercial banks, only 10 of which have more
\nthan Rp 1 trillion in paid-up capital.<\/p>\n
Analysts said that banks which currently hold paid-up capital
\nof more than Rp 800 billion might not opt for merger in order to
\nmeet the new capital requirement, but instead seek foreign
\ninvestment.<\/p>\n
The majority of Indonesia's banks have capital below Rp 500
\nbillion, meaning that to meet the capital requirement, five or
\nsix banks will have to merge.<\/p>\n
Analysts said that a major problem with the ambitious merger
\nplans was finding suitable merger partners because of the limited
\nnumber of healthy banks.<\/p>\n
Several banks, mostly from the same business groups, have
\nsigned MOUs to embark on a merger process, including banks under
\nthe BNDI Bank with Bank Internasional Indonesia; and banks from
\nthe diversified Bakrie Group. (08)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/one-stop-service-for-bank-mergers-to-be-established-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}