Bank DKI to merge with provincial banks

JAKARTA (JP): City-owned Bank DKI plans to merge with provincial banks in order to meet the central government's requirement of a minimum paid-up capital of Rp 1 trillion by the end of the year, an official said.

"The bank has no other choice if it wants to meet the required capital, even though there are only a few qualified provincial banks," Deputy Governor for Economic Affairs Harun Al Rasyid said Thursday

The only qualified regional banks are those in Java and Bali, he said.

Harun did not disclose when the plan, to be coordinated by the Ministry of Home Affairs, would be realized.

The city administration will not add to the bank's equity before the merger "as the bank has quite big equity as a foreign exchange bank", he said.

Based on its latest financial report, Bank DKI's paid-up capital -- as of Sept. 30 last year -- totaled Rp 172.5 billion with assets worth Rp 4.37 trillion.

It reported a net profit of Rp 35.5 billion during January through September last year.

Harun said Bank DKI's performance was the soundest compared to those of other provincial banks.

Bisnis Indonesia daily reported earlier that the merger of the country's 27 regional banks would only be able to accrue capital worth Rp 800 billion.

As the best performer among the 27 banks, Bank DKI might face an uncertain future, Harun said.

"We don't even know what the bank will be like after the merger."

The central government requires all banks -- by the end of this year -- to have a minimum capital of Rp 1 trillion for the first year and Rp 3 trillion in two years.

During Monday's plenary session on the city's draft budget, councilors from Golkar and Indonesian Democratic Party factions suggested the municipality take immediate steps to ensure the bank meets the end-of-year deadline. (ind)