BNI, Lippo Bank plan rights issue too boost capital

JAKARTA (JP): Publicly listed Bank Negara Indonesia (BNI) and Lippo Bank plan a rights issue to finance their recapitalization costs, the banks announced on Tuesday.

BNI said it would sell 151.9 billion shares next month through a rights issue to finance recapitalization costs of Rp 52.8 trillion.

The shares, each with par value of Rp 35, will be sold to existing shareholders at Rp 347.58 each during the offering period between July 5 and July 16.

The bank said shareholders would be entitled to buy 35 rights shares for every old share they hold at the 35-for-one rights issue.

The government, which owns 75 percent of the bank's shares, would act as a standby buyer for any shares not bought by shareholders, the bank said.

BNI suffered a significant negative spread last year due to interest expenses being higher than interest on income, resulting from the unstable, high interest banking environment.

The net interest loss for the 1998 financial year was Rp 7.2 trillion, compared to Rp 1.4 trillion net interest the previous year.

The government, through its recapitalization program, is helping troubled banks raise their Capital Adequacy Ratio (CAR) level to four percent.

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

The government has allocated Rp 233.4 trillion for the seven ailing state banks.

The other six banks are Bank Dagang Negara, Bank Pembangunan Indonesia, Bank Export Import, Bank Bumi Daya, Bank Rakyat Indonesia and Bank Tabungan Negara. The first four will operate under the management of Bank Mandiri.

Lippo Bank said it also planned to issue a 36-for-10 rights issue to raise Rp 4.228 trillion.

The rights issue, the second one for the bank in six months, is part of the government-sponsored recapitalization program under which bank owners have to come up with 20 percent of the total recapitalization cost of Rp 8.737 trillion.

The bank conducted a rights issue last December. The upcoming rights issue is to plug the hole created by an increase in recapitalization costs since the first estimate.

The bank prices the rights shares at Rp 259.784 per share, with the government as the standby buyer, under the recapitalization agreement.

Lippo Bank suffered a Rp 1.2 trillion net interest loss due to the negative spread last year, compared to a net interest income of Rp 561 billion the previous year.

The bank's bad debt provisions were Rp 6.8 trillion, compared to Rp 134.12 billion in 1997.

The bank is one of eight private banks that will be recapitalized by the Indonesian government. (udi)