Shareholders approve Lippo Bank's rights issue plan<\/p>\n
JAKARTA (JP): Publicly listed Lippo Bank obtained shareholders
\napproval on Wednesday for a rights issue that will allow it to
\nraise Rp 4.7 trillion to finance its recapitalization program.<\/p>\n
The bank said in a statement that some 17.1 billion new shares
\nwith a par value of Rp 10 would be issued at Rp 275 each.<\/p>\n
The government has required all of the country's commercial
\nbanks to have a minimum 4 percent capital adequacy ratio (CAR) by
\nthe end of this year.<\/p>\n
Banks with a CAR level of between minus 25 percent and 4
\npercent are eligible to join the government bank recapitalization
\nprogram in which the government will provide up to 80 percent of
\nthe recapitalization funding, while the bank must provide the
\nremaining 20 percent.<\/p>\n
The CAR is the ratio between capital and risk-weighted assets.<\/p>\n
Lippo did not say what its CAR level was.<\/p>\n
\"We see long term bright prospects for the Indonesian banking
\nindustry,\" said president Eddy Sindoro, adding that the banking
\nsector was one of the key elements in the recovery of the crisis-
\nhit economy.<\/p>\n
The bank said that its significantly increased capital would
\nstrengthen its liquidity position and boost its net interest
\nmargin and profitability.<\/p>\n
Lippo Bank, which was established in 1948, claims to have more
\nthan 2.4 million customers and 400 branch offices throughout the
\ncountry.<\/p>\n
The bank said that the issuance of the new shares with a par
\nvalue of Rp 10 each, the first in the history of the country's
\ncapital market, was meant to provide greater flexibility for the
\nbank in issuing new shares in the future without having first to
\nincrease its capital base.<\/p>\n
It pointed out that with a capital base of Rp 1.27 trillion,
\nthe bank could issue some 127.15 billion new shares with a par
\nvalue of Rp 10, compared to a maximum of only 2.54 billion new
\nshares if using a par value of Rp 500.<\/p>\n
\"Such a flexibility is required in coping with economic and
\nmarket conditions which change rapidly,\" a representative from
\nLippo Bank said. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/shareholders-approve-lippo-banks-rights-issue-plan-1447893297",
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