BI, Bapepam prepare merger ruling
BI, Bapepam prepare merger ruling
JAKARTA (JP): Bank Indonesia Governor J. Soedradjad Djiwandono
said yesterday that the central bank and the Capital Market
Supervisory Agency (Bapepam) are preparing a regulation to
facilitate mergers between publicly-listed banks.
"The regulation is necessary to prevent listed banks from
being controlled by irresponsible people," he said after a
central bank hearing with House Commission VII.
Soedradjad said that individuals or institutions could easily
control the ownership of a bank by taking over the majority of a
bank's shares through the stock exchange.
He said that takeover moves are common in the capital market.
"But for banks, such a deal should be carefully watched
because it could lead to the entry of blacklisted people into the
management or ownership of a bank," he said.
The central bank issued a ruling last year prohibiting persons
with criminal records or those with "negative backgrounds" from
becoming bank shareholders or executives.
Jopie Wijaya, an executive with the publicly-listed Steady
Safe public transportation company, recently made a surprise move
to acquire a 20 percent stake in publicly-listed Bank Papan
Sejahtera. Jopie, who became the bank's majority shareholder
after the takeover, sold his stake in the bank less than two
months after he concluded the deal.
Sources said that the central bank's planned regulation would
help prevent bank shares from becoming the target of speculation.
Publicly listed Bank Mashill, according to the sources, also
has plans to merge with Bank Tiara, which is listed on the
Jakarta Stock Exchange. Execution of the plan must now wait until
the regulation is issued.
Soedradjad said that the current regulation only covers the
merging of unlisted banks and is designed to encourage small
banks to merge among themselves or with larger banks.
Small banks, however, reportedly have had difficulties in
negotiating mergers despite incentives offered by the government.
Riyanto Sastroatmodjo, a former senior official at Bank
Indonesia, said that both healthy banks and ones with unsound
performances have had similar difficulties.
He said that healthy banks are generally reluctant to accept
merger offers from unsound banks for fear of hurting their image
and performance.
"The sound banks also face a dilemma because shareholders do
not want to lose control of their operations," he told a seminar
on mergers and acquisitions in the banking industry last week.
The government has issued a number of incentives to encourage
mergers in the country's overcrowded banking industry. They
include tax facilities related to the transfer of a bank's assets
in a merger deal and an automatic promotion in status to that of
foreign exchange bank. A bank that acquires the assets of a
merged partner, for example, is exempted from paying income tax
on the transfer of assets in the deal.
At least 10 banks have unveiled plans to merge with other
banks but have had difficulties carrying out the mergers due to a
lack of incentives in having to deal with non-performing loans.
(hen)
JAKARTA (JP): Bank Indonesia Governor J. Soedradjad Djiwandono
said yesterday that the central bank and the Capital Market
Supervisory Agency (Bapepam) are preparing a regulation to
facilitate mergers between publicly-listed banks.
"The regulation is necessary to prevent listed banks from
being controlled by irresponsible people," he said after a
central bank hearing with House Commission VII.
Soedradjad said that individuals or institutions could easily
control the ownership of a bank by taking over the majority of a
bank's shares through the stock exchange.
He said that takeover moves are common in the capital market.
"But for banks, such a deal should be carefully watched
because it could lead to the entry of blacklisted people into the
management or ownership of a bank," he said.
The central bank issued a ruling last year prohibiting persons
with criminal records or those with "negative backgrounds" from
becoming bank shareholders or executives.
Jopie Wijaya, an executive with the publicly-listed Steady
Safe public transportation company, recently made a surprise move
to acquire a 20 percent stake in publicly-listed Bank Papan
Sejahtera. Jopie, who became the bank's majority shareholder
after the takeover, sold his stake in the bank less than two
months after he concluded the deal.
Sources said that the central bank's planned regulation would
help prevent bank shares from becoming the target of speculation.
Publicly listed Bank Mashill, according to the sources, also
has plans to merge with Bank Tiara, which is listed on the
Jakarta Stock Exchange. Execution of the plan must now wait until
the regulation is issued.
Soedradjad said that the current regulation only covers the
merging of unlisted banks and is designed to encourage small
banks to merge among themselves or with larger banks.
Small banks, however, reportedly have had difficulties in
negotiating mergers despite incentives offered by the government.
Riyanto Sastroatmodjo, a former senior official at Bank
Indonesia, said that both healthy banks and ones with unsound
performances have had similar difficulties.
He said that healthy banks are generally reluctant to accept
merger offers from unsound banks for fear of hurting their image
and performance.
"The sound banks also face a dilemma because shareholders do
not want to lose control of their operations," he told a seminar
on mergers and acquisitions in the banking industry last week.
The government has issued a number of incentives to encourage
mergers in the country's overcrowded banking industry. They
include tax facilities related to the transfer of a bank's assets
in a merger deal and an automatic promotion in status to that of
foreign exchange bank. A bank that acquires the assets of a
merged partner, for example, is exempted from paying income tax
on the transfer of assets in the deal.
At least 10 banks have unveiled plans to merge with other
banks but have had difficulties carrying out the mergers due to a
lack of incentives in having to deal with non-performing loans.
(hen)