Bank Danamon to allocate Rp 1.2t in new loans

JAKARTA (JP): Publicly listed Bank Danamon plans to channel up to Rp 1.2 trillion (US$137.93 million) in new lending this year, according to the bank's vice president, Armand B. Arief.

Armand said on Tuesday that the bank would largely focus its lending on consumers and the retail sector for the time being.

"We expect to be able to lend up to Rp 1.2 trillion this year," he said in a news conference.

Armand said that since November 1999, the bank had channeled between Rp 700 billion and Rp 800 billion in new lending.

Bank Danamon is now the country's fourth largest bank, after its legal merger with eight banks was completed on Friday. The bank has total assets of Rp 65 trillion and equity of 2.5 trillion.

The government injected some Rp 28.72 trillion worth of bonds last week into Bank Danamon to allow the bank to maintain a positive capital adequacy ratio (CAR) as the eight smaller banks, mostly with negative CAR, were merged into the bank.

Danamon now has a CAR level of 32.5 percent compared to 36 percent before the merger. The minimum CAR level stipulated by the government for this year is 4 percent.

Armand was confident that the operational merger with the eight banks could be completed in late September or early October, adding that the operational merger with Bank Jaya was completed on Monday.

He said that the next step was to merge Bank Tiara into Bank Danamon on July 14, and to be followed successively by Bank Pos, Bank Rama, Bank Tamara, Bank Nusa Nasional, Bank Duta and finally Bank Risjad Salim Internasional by the end of September.

Armand said that while Bank Danamon wanted to recruit some 1,200 ex-employees of the eight banks, most of them preferred the compensation package for early retirement.

"We think we can only get about 500 of them to join us, and we'll have to recruit the remaining 600 to 700 from outside the eight banks," he said.

Danamon now has some 12,000 employees, while the eight banks had a combined number of staff of about 11,500.

Armand said that Bank Danamon now has 500 branches throughout the country and would have an additional 38 branches acquired from the eight banks.

He said that most of the branches of the eight banks had to be closed down because they were mostly operating in the same areas as Danamon.

Meanwhile, Safrullah Hadi Saleh of the Bank Danamon merger coordination team said that Bank Danamon was expected to be able to "break even" by the end of this year.

"We expect to be able to minimize the impact (of the merger process) into Danamon's (financial) performance," he said.

He did not provide figures.

Asked about the next step to be taken after completing the operational merger, Armand said: "It's up to the government. Our concern is to implement the strategy contained in our business plan."

The government nationalized Bank Danamon in 1998, and the eight banks last year.

Bank Danamon announced that it would donate some Rp 250 million on Wednesday to help the Bengkulu earthquake victims.

It also said that the bank would continue to organize fund- raising for the Bengkulu quake until October.(rei)