Bank Tiara: Success in being different

As the first bank to set up after the landmark "Pakto" banking deregulation package of October 1988, Bank Tiara is quite a young establishment. Nonetheless it has already demonstrated its astute entrepreneurship and has earned itself a recognized place in a banking sector dominated by bigger and more established financial institutions in Indonesia.

Since its inception in January 1989, the bank has recorded several outstanding achievements. It rapidly climbed to foreign exchange bank status, receiving its foreign exchange license in March 1992 -- the first post-Pakto bank to be given this status. It also became the fist post-Pakto bank to be publicly listed, placing 25 million shares on the Jakarta Stock Exchange in November 1993.

Bank Tiara's impressive performance is due largely to its business strategy. The bank's focus from the very beginning was to concentrate on small and medium-sized enterprises -- a move that ran against the banking trends of the late 1980s.

"Pakto" eased the regulations for the establishment of new banks and opening of new branches. The trend for banks then was aggressive expansion and lending. Consumer and retail banking were the norm, with branches mushrooming everywhere.

Except for one. "We were observing the market carefully then. Traditionally, private banks start by serving the middle market. But after Pakto, we noticed that most banks were moving away from it and towards the consumer and upper-tier corporate markets. The small and medium-sized businesses were left ignored," said Hendrick Kolonas, president director of Bank Tiara.

"After a careful market study, we decided to target where others did not tread. Since then, the middle market has been a proven strategy," he added.

Thus from the very start, Bank Tiara has charted an extremely clear strategy. Kolonas believed in the lucrative middle market businesses, many of which are run by family entrepreneurs. The first branch opened in Jalan Batu Ceper, Central Jakarta, where many wholesale, textile, export and import businesses were located.

With only one branch, 40 people and a capital base of Rp10 billion when operations started in July 1989, Bank Tiara grew by leaps and bounds to become one of Indonesia's top 30 private banks in 1993.

Ometraco group

Bank Tiara is part of the Ometraco group. It is 66.2 percent owned by Ometraco, an industrially-powerful group founded in 1960 by Ferry Teguh Santosa in Surabaya, East Java.

In the early days of the 1970s, Ometraco entered into agriculture and commodity trading. By the end of the decade, the group had expanded into farming and property. Later in the 1980s, it entered into animal feeding, banking, finance, stockbroking, hotel and technical businesses.

In 1993, Ometraco's consolidated turnover was in excess of Rp 1 trillion. Bank Tiara is the fifth Ometraco group company to be listed on the Jakarta Stock Exchange.