Bank Global plans rights issue to boost capital

Bank Global plans rights issue to boost capital

JAKARTA (JP): Publicly listed Bank Global plans a rights issue
in the second semester of this year to strengthen the company's
capital structure.

Company president Irawan Salim said on Tuesday that the rights
issue was expected to raise Rp 200 billion (about US$23.5
million) in fresh funds.

He said the company expected shareholders to approve the plan
within the next two months.

"Proceeds from the rights share issue will be used to increase
Bank Global's paid-up capital from its current level of Rp 90
billion," he said at a media gathering.

Irawan said that Bank Global's total assets were worth Rp 500
billion with paid-up capital of Rp 90 billion as of the end of
1998.

"Despite the crisis, we managed to book a profit due to our
conservative approach," he said, saying the bank recorded a gross
profit of about Rp 3.9 billion last year.

He said that the bank's third party funds (deposits) jumped by
280 percent to Rp 406 billion at the end of 1998 from the same
period in 1997, due to a sharp increase in the number of new
depositors.

Bank Global was placed by Bank Indonesia, the central bank, in
category A, according to the soundness of its capital structure.
Irawan said the bank's adequacy ratio (CAR) was 21.36 percent in
September, far above the minimum 4 percent level that must be
reached by banks this year.

CAR is the ratio of paid-up capital to risk-weighted assets.

"Indonesians are more selective nowadays in choosing banks to
deposit their money. Our good reputation attracts people although
we offer relatively small interest rates compared to other
private banks," he said.

"We have received more than 500 new customers per month, most
of them are former customers of banks placed in category B or
category C, and also from the now defunct banks."

Banks listed in category A are those with CAR higher than 4
percent, which do not require government assistance, category B
banks are those with CAR between 4 percent and minus 25 percent,
and are eligible to join the government-sponsored
recapitalization program. Banks that cannot raise their CAR to
above the minus 25 percent cutoff level face closure.

Irawan also said that the increase in the number of customers
has forced the company to recruit more employees and open new
branch offices.

He said the bank's total credit stood at Rp 180 billion as of
the end of 1998. Most of the loans were issued to small and
medium-sized businesses in urban centers throughout West Java.

"We have no plans to expand our business to corporate banking
because the sector is proven to have bigger risks than small and
medium businesses and retail banking," he said. (gis)