BNI to be merged with BTN, Widigdo says

JAKARTA (JP): President of Bank Negara Indonesia (BNI) Widigdo Sukarman said on Tuesday that the government would go ahead with a plan to merge Bank Tabungan Negara (BTN) into the publicly listed BNI.

Widigdo said that the merger of the two banks would be part of the government's program of restructuring the country's seven state banks.

BNI is the country's largest bank, focusing its operation on corporate banking while BTN is a medium-scale bank that operates mainly in providing loans to the housing sector.

BNI reported a 69 percent decline in net profit in the first half of this year to Rp 70.7 billion (US$6.4 million), from Rp 230 billion in the corresponding period last year.

The decline was aggravated by dwindling interest income to Rp 34.6 billion from Rp 629.3 billion in the first half of 1997.

As part of the state banks restructuring scenario, the government last month established a new bank called Bank Mandiri. The new institution will merge four of the seven state banks -- Bank Pembangunan Indonesia (Bapindo), Bank Bumi Daya (BBD), Bank Dagang Negara (BDN) and Bank Ekspor Impor Indonesia (Bank Exim).

The merger would create a healthier bank with combined assets of about Rp 98 trillion (about US$18.8 billion)

Bank Mandiri will also take over corporate operations of Bank Rakyat Indonesia (BRI), which according to the restructuring program will be assigned only to provide loans to farmers, small and medium-scale companies.

All merger processes will be completed by the year 2000 and after that Indonesia will only see three state banks in operation. They are Bank Mandiri, BNI and BRI. (aly)