Bank Danamon to face test before merger: BI

JAKARTA (JP): Bank Indonesia senior deputy governor Anwar Nasution said on Thursday plans by the Indonesian Bank Restructuring Agency (IBRA) to merge Bank Danamon with eight other nationalized banks could not yet be implemented because it had yet to fulfill the central bank requirements on merger and acquisition.

Anwar said Bank Indonesia had yet to audit the new personnel of the board of commissioners and board of directors of Bank Danamon.

"They have to pass our fit and proper test as one of the requirements," he said at a media conference.

IBRA plans to merge publicly listed Bank Danamon with Bank PDFCI, Bank Duta, Bank Nusa Nasional, Bank Pos Nusantara, Bank Rama, Bank Tamara, Bank Tiara Asia and Jaya Bank Internasional later this year.

The failure to meet merger requirements is likely to delay the merger plan, which is a key bank restructuring program from IBRA.

After the nationalization of Bank Danamon, its senior executives were replaced by top people from Bank PDFCI, which was nationalized by IBRA after it almost collapsed in the wake of the economic crisis last year.

Anwar said Bank Indonesia had asked PDFCI and IBRA several times to provide the necessary documents for the fit and proper test since July, but IBRA only gave the nod to provide the documents on October 27.

Anwar dismissed earlier media reports that the central bank was trying to block the merger plan of Bank Danamon.

Anwar also said IBRA could not proceed with the merger plans if the newly merged banks could not meet the minimum four percent capital adequacy ratio (CAR) requirement.

Anwar said if Bank Danamon merged with PDCI, their resulting CAR level would be 17 percent, which would meet the merger requirement.

But if the two banks were to be merged with the other seven banks, the resulting CAR level would be negative, he said.

He pointed out that based on the August due diligence process, the resulting CAR level of the nine merged banks was minus 59.4 percent.

Meanwhile, Bank Indonesia licensing director Sukarwan said a fit and proper test could take between one and two weeks if the necessary documents were complete and available.

He expected they would be able to start the fit and proper test of Bank Danamon personnel as soon as possible. (rei)