Bank Bira to bring out rights shares in March

JAKARTA (JP): Publicly listed Bank Bira said on Tuesday that it needs at least Rp 3 trillion (about US$345 million) to meet the minimum 4 percent capital adequacy ratio (CAR).

Bank Bira's president Bambang Panutomo said that the bank would issue rights shares next month to finance 20 percent of the required funds.

The remaining 80 percent is expected to come from the government as part of its bank recapitalization program, he said.

Bambang said that one British and two American financial firms were interested in Bira's rights shares.

"These strategic investors have committed to inject Rp 600 billion by buying the rights shares," he told reporters.

However, he said Bira's founding shareholders, PT Asia Teladan Sakti, which owns 40 percent, and PT Aman Lintas, which owns 17 percent, were ready to buy the rights shares if the three financial firms backed down on their commitments.

"Bira's founding shareholders have signed a letter of commitment to provide the Rp 600 billion needed for the recapitalization program. This letter of commitment is attached to Bira's business plan submitted to the central bank on Feb. 15," he said.

The central bank divides banks into three categories for the recapitalization program. Banks with CAR levels of 4 percent and above are put in Category A, while those with CARs between 4 percent and minus 25 percent are placed in Category B. Banks with CARs of less than minus 25 percent are listed in Category C.

Bank Bira is placed in the Category B.

According to the program, Category A banks are considered sound. Banks in Category B are eligible to join the recapitalization program, while Category C banks face liquidation if they cannot raise their CAR levels.

To qualify for the recapitalization program, banks in the Category B, are required to submit their business plans to the central bank, including plans to lift their CAR levels to 8 percent by 2001 and shareholders' commitment to provide 20 percent of the needed funds.

If the government approves the plan, it will inject 80 percent of the needed recapitalization funds. (02)