Danamon merger 'won't affect creditors'

JAKARTA (JP): The merger of publicly listed Bank Danamon and eight other smaller banks will not affect their obligations to creditors.

The banks' joint communication team said on Thursday that creditors would be protected and their funds in the respective banks would remain safe despite the merger.

"Danamon and the other eight banks have all issued a circular to assure their creditors that the merger will not affect their debt payment," the team said in a statement.

The team said the issuance of the circulars, jointly prepared with the Indonesian Bank Restructuring Agency (IBRA), was one of their requirements since the merger would affect all the banks' clients, be they creditors, customers, depositors, shareholders or employees.

Eight private banks: publicly listed Bank Duta, Bank Jaya International, Bank Nusa Nasional (Bank BNN), Bank Pos Nusantara, Bank Tamara, Bank Tiara Asia, Bank Rama and Bank Risjad Salim International (Bank RSI) will be merged with Bank Danamon as part of the government-sponsored bank recapitalization program.

The team said creditors could raise objections to the merger with their respective banks before April 24.

The team said the legal aspect of the merger would be completed in May, but the operations and the banking networks would be integrated in stages.

The operations of the first three banks -- Bank Jaya, Bank Pos Nusantara, and Bank Tiara Asia -- would be fully integrated with that of Danamon in June, while that of Bank Rama and Bank Tamara in July. Bank Duta and Bank BNN would be completed in August and Bank RSI in September, the team said.

However, it did not disclose the bank that would be the surviving bank in the merger process.

But it said that the bank created from the merger would have a capital adequacy ratio (CAR) of at least 8 percent, higher than the 4 percent level required by the central bank.

The project manager of the merger program said the government had recapitalized Bank Danamon, Bank PDFCI and Bank Tiara in April and May of last year.

He said the remaining seven banks had a negative level of CAR, but declined to disclose the figures. The cost of recapitalizing the seven banks was estimated to have been between Rp 25 trillion and Rp 30 trillion.

The team said that it had gained support from the employees and union workers of the merger banks, adding they had started a rationalization policy and a retirement or lay off program. (07)