Banks disclose their CAR levels

Banks disclose their CAR levels

JAKARTA (JP): In response to media reports citing nine banks
listed to face liquidation this year, six banks disclosed their
CAR levels to shrug off speculation against them.

The six publicly listed banks submitted an explanation of
their CAR levels to the Jakarta Stock Exchange (JSX) on Thursday.

They were Bank Buana Indonesia, Bank Universal, Bank Inter
Pacific, Bank Panin, Bank Internasional Indonesia (BII) and state
Bank Negara Indonesia (BNI), according to the news website,
Satunet.com

Under a Bank Indonesia regulation the banks must have a
minimum CAR level of eight percent to escape liquidation.

CAR measures a bank's capital against its risked weighted
assets; the ratio is used to measure its health.

Local media, including The Jakarta Post, published last week a
list of nine banks that face the risk of liquidation, as they
showed CAR levels below the minimum required.

Bank Indonesia, however, denied it had disclosed a list
containing such information.

The central bank's deputy governor, Miranda Goeltom, had said
earlier that nine banks face closure if they failed to improve
their CAR levels by the end of this year.

According to the list, the nine banks included BII, Bank
Universal, Bank IFI, Bank Tabungan Pensiunan Nasional, Bank Artha
Media, Bank Swaguna, Bank Prima Express and Bank Tugu.

Of the list, two - BII and Bank Universal - responded to the
reports by disclosing their CAR position to the JSX.

The other four banks, BNI, Bank Buana, Bank Panin, and Bank
Inter Pacific reported that their CAR level stood well above the
minimum level of 8 percent.

BNI said its CAR level, as of May this year, stood at 14.09
percent.

Bank Buana said it had "no comment" on the media report, other
than disclosing that its CAR level stood at 21.89 percent.

Whereas, Bank Panin director Ahmad Hidayat assured the public
by claiming his bank's CAR level stood at a sizable 39.82
percent.

Bank Inter Pacific reported a CAR level of 11.55 percent.

Meanwhile, Bank Universal said in its explanation to JSX, its
CAR level stood at 4.21 percent, as of May 31.

This level is still in line with the current minimum
requirement of 4 percent. But, as of next year, the bank must
show a CAR level of at least 8 percent.

Bank Universal said it had proposed a "financial initiative"
to prop up the CAR level, but awaited Bank Indonesia's approval.

The bank had earlier attempted a merger with the larger Bank
Danamon yet the plan came to nothing, as the two failed to reach
an agreement.

The financially troubled BII claimed a CAR level of 9.13
percent as of March this year.

However, the bank's CAR level is likely to plunge due to its
massive non-performing loans.

About half of BII's loans have been extended to affiliated
parties under its parent company, the Sinar Mas Group.

The loans amount to some US$1.2 billion, of which $1 billion
is subject to a debt standstill declaration by Sinar Mas. (bkm)