Bank Duta-Bank Umum Tugu merger approved

JAKARTA (JP): Shareholders of publicly listed Bank Duta yesterday endorsed a plan to merge with Bank Umum Tugu, owned by timber tycoon Mohamad "Bob" Hasan, a long-time golfing partner of ex-president Soeharto.

The merged banks, which will take the new name of Bank Palapa, have Rp 8.13 trillion (US$556.85 million) in total combined assets as of the end of last March, and Rp 460 billion in paid-up capital -- well above the Rp 250 billion minimum requirement.

The new bank's president, Muchtar Mandala, said after the extraordinary shareholders meeting that Bank Palapa's capital adequacy ratio (CAR) would exceed the minimum 4 percent level required by the government.

He would not disclose the new bank's CAR, but said that Bank Duta's CAR alone totaled 13 percent at the end of 1997.

At least four other banks had showed interest in joining the new bank, said Muchtar, previously the president of Bank Duta. He would not provide names, however.

Publicly listed Bank Umum Nasional (BUN) initially planned to merge with Bank Duta but decided to back out after it was taken over by the Indonesian Bank Restructuring Agency (IBRA) due to huge liquidity loans from Bank Indonesia.

Unlisted Bank Bukopin similarly backed away from initial interest after the government recently abolished the minimum paid-up capital requirement, Muchtar said.

BUN, also owned by Bob Hasan, reportedly needs over Rp 10 trillion ($747 million) in cash to meet the minimum 4 percent CAR requirement or face liquidation.

Bank Palapa is 22 percent publicly owned, while 6 percent is controlled by the bank's cooperatives unit and the remaining 72 percent is equally owned by Hedianto, Ali Affandi and Zaid Hussein -- top officials of three social foundations controlled by Soeharto.

The shareholders also agreed yesterday to appoint Sonni Dwi Harsono as the chair of the new bank's board of commissioners. Sonni is the president director of Tugu Pratama, Bank Umum Tugu's parent company.

Yesterday's meeting also saw the acceptance of Bob Hasan's resignation as Bank Duta's chairman.

Many of the country's ailing banks indicated late last year that they would embark on ambitious merger plans to strengthen their capital base in the wake of the economic crisis and declining market confidence in the sector.

The merger plans, however, seemed easier said than done. Only banks under the Bakrie Group and Bank Duta have so far completed merger deals. (rei)