Bank Umum Servitia delays merger plan

JAKARTA (JP): Publicly listed Bank Umum Servitia (BUS) said yesterday it had delayed its plan to merge with three other medium-sized banks.

The bank said in a statement that the delay was decided to enable each bank to consolidate their operations before entering the merger.

The bank announced in April that it would merge with Bank Central Dagang (BCD), Bank Hastin and Bank Prima Express this year to enable the four banks to meet the minimum capital requirement set by Bank Indonesia.

"The merger plan will be discussed again in the next nine months," the bank's statement said. It is thought the other three banks are still going to proceed with the merger.

BUS, which is currently under the supervision of the Indonesian Banking Restructuring Agency (IBRA), reported that its pretax profit plunged to Rp 1.52 billion in the first half of this year from Rp 15.20 billion in the corresponding period of last year.

The statement said the decline in profit was largely due to a significant increase in the bank's loan loss provision to Rp 106.99 billion in 1998 as compared to just Rp 26.1 billion the previous year.

"We had to increase the nonperforming loan provision to anticipate the increase in nonperforming loans this year," it said.

Total public funds collected by BUS in the first half of this year rose to Rp 2.65 trillion compared to Rp 1.17 trillion in the same period last year.

The bank's credits rose to Rp 2.38 trillion in the first semester from Rp 1.25 trillion in the corresponding period last year.

The bank will also increase its paid-up capital to Rp 500 billion by the end of this year from Rp 100 billion currently bringing its capital adequacy ratio (CAR) to 20 percent, higher than the four percent set by the government, it said.

The statement said the bank secured the Rp 400 billion in fresh funds from a recent rights issue to boost its capital. (aly)