Five banks sign deal to form Bank Permata
Five banks sign deal to form Bank Permata
he Jakarta Post, Jakarta
Bank Bali, Bank Universal, Bank Arthamedia, Bank Prima Express
and Bank Patriot on Friday signed a merger agreement to become
the country's 10th largest bank in terms of assets under the new
name Bank Permata (Jewel Bank).
The signing followed Bank Bali and Bank Universal's general
shareholders meetings on Friday that approved the merger. The
other three banks' shareholders agreed to it last week.
"What's pending now is Bank Indonesia's license," I Nyoman
Sender, who chairs the Indonesian Bank Restructuring Agency's
(IBRA) Bank Restructuring Unit (BRU), told reporters at Bank
Bali's office where the merger document was signed.
Nyoman expected Bank Indonesia to issue the license by Sept.
30. This would allow the banks to start the operational merger,
using Bank Bali's operational system as its platform.
Nyoman said the first to join Bank Bali's platform would be
Bank Arthamedia. Others would follow within a two-week interval,
starting with Bank Universal, Bank Prima Express and later Bank
Patriot.
IBRA's project director, Chandra Purnama said all banks would
continue to operate normally throughout the merger process.
"By the end of December we hope to have integrated the five
banks' operations, so that by January they're effectively one,"
Chandra said.
Bank Permata is expected to own assets worth Rp 32 trillion
(about US$ 3.5 billion), making it the country's 10th largest
bank.
Its combined customer base will be around 1.2 million to 1.3
million people with third party liabilities amounting to Rp 28
trillion.
"The majority is in favor for the bank to focus on the retail
market and later we'll lend a greater percentage of (loans) for
that share," Nyoman said.
The new bank will have a 12 percent capital adequacy ratio
(CAR), which measures a bank's capital against its risked
weighted assets, mainly loans. Bank Indonesia requires all banks
have a minimum CAR level of 8 percent or else face closure.
IBRA is forcing the five banks to merge to avoid having Bank
Indonesia shut them down due to low CAR levels. Out of the five,
only Bank Bali's CAR was above 8 percent.
The banks were placed under IBRA's control after the agency
bailed them out with government bonds in the wake of the 1997
economic crisis.
Called the recapitalization bonds, they bolster banks' CAR
levels with steady interest revenues paid with taxpayers money.
To give Bank Permata a head start, IBRA has injected it with
another Rp 4.6 trillion in state bonds.
Nyoman added IBRA planned to layoff 950 of the around 7,000
staff at the banks for which it would provide Rp 157 billion in
severance payments.
The signing on Friday came amid ongoing protests by the five
banks' employees who demanded better severance schemes.
Merging weak banks with stronger ones is part of efforts to
restructure the country's vulnerable banking sector. Bank Permata
will become one of several IBRA merger products.
In 1999, state owned Bank Dagang Negara, Bank Bumi Daya, Bank
Exim and Bank Pembangunan Indonesia merged into what is now at Rp
262 trillion in assets of the country's biggest bank, Bank
Mandiri.
That was followed by the merger of several small banks into
Bank Danamon, while the merger of Bank Pikko and Bank Danapac is
now in the pipeline.