Bank Bira to merge with three local banks

JAKARTA (JP): Publicly listed Bank Bira, which is currently under the supervision of the Indonesian Bank Restructuring Agency (IBRA), plans to merge with three local banks later this year.

Bira's corporate advisor Parveen Gandhi said yesterday details of the merger were under negotiation. He declined to reveal the names of the other banks.

"Hopefully the merger plan can be finalized by the end of this year," he told The Jakarta Post.

It has not been decided which of the institutions would be the surviving bank in the deal.

"When the merger is completed, the surviving bank will operate with a strong capital base."

He said professional bankers were at the helm of the banks.

However, he said two of them were put under the supervision of IBRA in April this year after they obtained substantial liquidity credits from Bank Indonesia, the central bank.

Parveen said Bank Bira was also in talks with two foreign financial institutions which are interested in acquiring a significant portion of the bank's shares later this year.

He declined to reveal their names.

The bank's consolidated financial statement as of May 31 this year stated U.S.-based financial institution GE Capital, which currently holds a 7 percent stake in the bank, would consider increasing its share later this year.

"GE Capital has a keen interest to increase its stake in the bank by later this year,' the statement said.

The statement said that despite the country's dire economic crisis, foreign investors remained interested in the banking sector.

"Foreign investors, which account for 26 percent of the bank's total shares as of May 31, still have confidence in us," the statement said.

Bank Bira recorded a pre-tax profit of Rp 3 billion (about US$230,770) and total assets of Rp 7.23 trillion as of May 31. (aly)