Bank Rama set to merge with three other banks
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)