BNI letting other banks take over Bank Pacific

BNI letting other banks take over Bank Pacific

JAKARTA (JP): State-owned Bank Negara Indonesia 1946 has no
plans to acquire ailing Bank Pacific and will let interested
investors take it over, BNI president Widigdo Sukarman said.

Widigdo said that his bank was only providing technical
assistance to Bank Pacific and that BNI would not be affected by
the risks facing Bank Pacific.

"Any interested parties wanting to take it over should consult
with Bank Indonesia, not with us, because we are only assigned to
manage it," Widigdo told journalists at his office on Tuesday
night.

Bank Indonesia (the central bank) is the majority shareholder
of the ailing bank, controlling a 51 percent stake. Ibnu Sutowo,
former president of state-owned oil firm Pertamina, holds the
rest.

As reported by the Kontan and Warta Ekonomi business weeklies,
Bank Danamon has shown interest in acquiring the bank and is now
negotiating with the owners of Bank Pacific.

"We cannot comment on the matter (possible acquisition)
because we are in the process of negotiation," said Christiana M.
Damamik, a Bank Danamon executive.

Bank Pacific was reportedly on the brink of collapse in late
1995 due to bad loans, which prompted Bank Indonesia to take
action to save the bank. The central bank then assigned BNI to
manage the bank.

Bank Pacific's current bad loans are estimated at Rp 2.1
trillion (US$876 million). Its total assets were estimated at Rp
2.2 trillion at the end of 1995.

Most of the bad debts were incurred by PT Pacific
International Finance, a company owned by Endang Utari Mokodompit
-- former president of Bank Pacific and Ibnu Sutowo's daughter.

To help salvage the bank, BNI reportedly injected Rp 500
billion. The bank then issued money market securities worth Rp
500 billion, which were bought out by Bank Indonesia.

Widigdo, however, would not confirm that BNI had injected
fresh funds in Bank Pacific, stressing that the bank was assigned
"to manage the bank, not restructure the bank".

"We are just providing technical assistance, that's all. If we
are still needed to provide technical assistance, we will. If
not, that's all right," Widigdo said.

Widigdo said his bank would focus more on retail and
international banking.

To support its retail sector, he said, the bank would open
more outlets and launch new products to generate more funds from
the public. In international banking, the bank would expand its
overseas network, primarily by expanding its correspondent banks.
It also plans to strengthen its trade financing.

To support its trade financing, BNI floated $145 Yankee bonds
on the U.S. market last month. The BBB-rated 10-year bonds were
priced well and well received by investors, Widigdo said.

The coupon rate for the 10-year deal was set at 7.625 (not
6.625 as reported earlier), or 110 basis points above the U.S.
Treasury rate. BNI is the first Indonesian corporation to achieve
this. (rid)