BNI expects to sign recapitalization program

JAKARTA (JP): President of publicly listed Bank Negara Indonesia (BNI) Widigdo Sukarman said on Thursday the bank expected to sign its recapitalization program with the country's banking authorities sometime next week.

He said the state bank was still finalizing its business plan with consulting firm Arthur Andersen.

He said the business plan would be reviewed by another consulting firm, McKenzie, before it was presented to the government's bank recapitalization committee for approval.

"We're still in the finalization process," Widigdo said on the sidelines of a seminar on corporate leadership of state companies.

BNI needs some Rp 52.8 trillion to boost its capital adequacy ratio (CAR) to the government-set minimum 4 percent level.

CAR is the ratio between capital and risk-weighted assets.

The bank was to have already finalized its recapitalization program by the end of this month, according to the government's letter of intent to the International Monetary Fund.

Widigdo did not explain the reasons behind this delay.

He also deflected questions about whether the current drop in the value of the rupiah against the United States dollar would inflate the bank's recapitalization cost.

The rupiah closed at more than 8,300 against the U.S. dollar compared to around 6,500 in July.

The bank plans to launch a rights issue to finance the recapitalization program.

The bank's shareholders approved the rights issue in July during an extraordinary shareholders meeting.

Wididgo said shareholders had the right to purchase 35 new shares at a price of Rp 347.58 each for each share they held.

The government will act as a standby buyer if shareholders decline to exercise their rights.

The government is set to finance up to 100 percent of the bank's recapitalization cost. (rei)