Bank Papan gets Rp 9990.36b in liquidity credits

JAKARTA (JP): Publicly listed Bank Papan Sejahtera (BPS) said yesterday that it received liquidity credits of Rp 990.36 billion (US$90 million) from Bank Indonesia last year, or about 45 percent of the company's total assets of Rp 2.2 trillion in the same period.

One of the bank's commissioners, Al Njoo, said yesterday that Bank Papan had promised Bank Indonesia to pay the credits this year.

"The first installment will be paid at the end of June and the second at the end of December 1998," told the media after a shareholders meeting here yesterday, which among other things approved his appointment to commissioner from his previous job as president.

He was replaced by JRM Winarendra.

Njoo, however, did not disclose the outstanding credits provided by the central bank as of this month or how much of the loan Bank Papan had repaid.

Bank Papan, controlled by Hashim Djojohadikusumo's Tirtamas Group, is among 32 private commercial and provincial development banks currently under the supervision of the Indonesian Banking Restructuring Agency (IBRA) due to their worsening financial performance.

These banks, according to IBRA, have obtained liquidity credits from the central bank equivalent to more than 200 percent of their capital and have a capital adequacy ratio of less than 5 percent.

Al Njoo also declined to mention the financial sources from which the money would come to pay the central bank's credits but said that it was currently seeking to merge with several local private banks to boost its capital.

He said that talks on a merger were still underway and are expected to be concluded within two months.

"It is too early for us to mention the names of the other banks," he said.

He said that if the bank signed an agreement to merge, it would also seek approval from IBRA, which is currently supervising it, as well as from the Ministry of Finance.

But he said that merging with other private banks was the most feasible solution for Bank Papan to boost its capital and to face the tight competition in the banking industry in the years ahead.

He said the country would need around 20 strong banks with total assets ranging between Rp 20 trillion and Rp 30 trillion to survive the future cut-throat competition.

"That is why Bank Papan will have to merge with other banks," he said.

He said the bank's previous plan to merge with Bank Kredit Asia and Bank Pelita had been dropped as they had both been suspended by Bank Indonesia.

Bank Papan, which had total assets worth Rp 2.02 trillion last year, recorded a net loss of Rp 40.41 billion in 1997. The bank booked a net profit of Rp 8.76 billion the previous year. (aly)