BI gives green light to IBRA bank merger plan
BI gives green light to IBRA bank merger plan
The Jakarta Post, Jakarta
Bank Indonesia will clear the status of Bank Prima Express and
Bank Patriot in one or two days, to pave the way for the planned
merger of five banks under the supervision of the Indonesian Bank
Restructuring Agency (IBRA).
Central bank Governor Sjahril Sabirin confirmed that the two
banks would be allowed to join the merger scheme, along with Bank
Bali, Bank Universal and Bank Artha Media.
"With this, I hope the planned merger can go smoothly,"
Sjahril was quoted by detik.com as saying on Wednesday.
Sjahril's statement should serve as a relief for IBRA, as the
status of the two banks had been a cause for disagreement between
the agency and the central bank, over whether or not the two
banks were eligible to join the merger.
Previously, the central bank was reluctant to give its
approval on the IBRA-proposed merger, arguing that Prima and
Patriot were in a poor financial condition and not qualified for
a merger.
In fact, of the five banks, only Bank Bali has the capital
adequacy ratio (CAR) which managed to meet Bank Indonesia's
minimum requirement of 8 percent.
This should have led to liquidations. But with the merger
plan, they have been spared the ax, with IBRA chairman I Putu
Gede Ary Suta insisting that closing the two banks would only be
an additional burden to the government.
Meanwhile, State Minister of State Enterprises Laksamana
Sukardi, whose office oversees IBRA, stressed that the agency
would announce the merger plan process sometime next week.
"Hopefully, the whole process of the merger can be completed
soon," Laksamana said.
The five banks are among the 11 private banks under the
control of IBRA, who is responsible for leading the banks back
into good financial shape, and returning them to the private
sector.
The merging of local banks is seen as part of efforts to
restructure the country's troubled banking industry, which has
been widely blamed for the country's poor economic performance.
At the peak of the 1997 financial crisis, IBRA took over the
banks after most of their loans turned sour.