Bank Rama set to merge with three other banks

JAKARTA (JP): Publicly listed Bank Rama is set to merge with three other private banks later this year in a bid to meet the central bank's new capital requirement.

The bank's president, Putu Antara, said yesterday that the four banks were still negotiating the merger plan.

"Hopefully the merger plan will be finalized by the end of this year."

He did not provide the names of the other three banks.

Before the merger agreement is finalized, the four banks will conduct a due diligence audit, which could take between four and five months.

He said the sole objective of the merger was to increase the bank's paid-up capital to Rp 250 billion by the end of this year from a current Rp 150 billion.

According to capital requirements, commercial banks must have a paid-up capital of at least Rp 1 trillion by the end of 1998, Rp 2 trillion by the end of 2000 and Rp 3 trillion by the end of 2003.

But Bank Indonesia, the central bank, ruled recently that sound banks -- those which have cleared their nonperforming loans -- will be allowed to operate with a paid-up capital of Rp 250 billion by the end of this year.

Putu said the exception would allow Bank Rama to raise its capital base to no more than Rp 250 billion this year. The question, however, remains how the bank would meet the increased capital requirements in the years to come, he added.

"We will have a problem meeting the capital requirement in 2000 and 2003."

Putu said yesterday Bank Rama's net profit declined 50 percent to Rp 10.83 billion in 1997 from Rp 23.98 billion the previous year, partly due to the country's monetary crisis.

"Everybody in the business feels the pinch of the crisis," he said after the bank's annual shareholders meeting yesterday.

He declined to mention any projections for this year.

He said Bank Rama, which has 30 branches across the country, booked total assets of Rp 1.26 trillion as of December 1997, with total credits worth Rp 933.44 billion. (aly)