Govt Studies plans to merge state banks

Govt Studies plans to merge state banks

JAKARTA (JP): Minister of Finance Mar'ie Muhammad said
yesterday the government was studying the possibility of merging
the seven state banks into a smaller number, in a bid to
strengthen their international competitiveness.

"We know that among the state banks, there are good and not so
good banks, just like among private banks. Therefore, we are
looking at the possibility of pooling their resources," Mar'ie
said.

The seven state banks are Bank Rakyat Indonesia (BRI),
publicly listed Bank Negara Indonesia 1946 (BNI), Bank Dagang
Negara (BDN), Bank Tabungan Negara (BTN), Bank Expor Impor
Indonesia (Bank Exim), Bank Bumi Daya (BBD) and Bank Pembangunan
Indonesia (Bapindo).

But Mar'ie refused to name the good and not so good state
banks.

Based on InfoBank magazine's bank rating assessment, BBD is a
poorly performing bank and Bapindo an unhealthy bank. Bapindo has
not published financial reports since June 1994.

Mar'ie said the planned state banks merger was to improve
their competitiveness in global financial markets.

"We are witnessing globalization, including in the financial
sector. Thus, from now on, our national banks, including state
banks, have to compete globally, not just regionally. They should
try to become not only local champions but global ones," the
minister said.

BRI president Djokosantoso Moeljono welcomed the government's
plan to merge state banks and said mergers were common in the
banking industry worldwide.

He said a merger of state banks would strengthen their capital
and empower them to compete in the global market.

He said local banks were still very small compared to global
banks.

Even if the government merged the seven state banks into one
bank, it would still have total assets of less than US$100
billion. This is less than the assets of any U.S. bank. The
Bank of America held total assets of US$250 billion, he said.

But Djokosantoso refused to say which state banks he thought
should merge with which. "Let the experts judge."

Mar'ie also refused to say which state banks were to be
merged, how many state banks the government wanted and when the
government would do it.

Study

"All these things are now being studied and it is not an easy
matter. We don't want to merge banks and then split them again
later," Mar'ie said.

He said Ministry of Finance and Bank Indonesia, the central
bank, staff were working on a feasibility study.

According to Bisnis Indonesia daily, the government would most
likely merge the seven state banks into four, BTN with BNI, BBD
with BDN and Bapindo with Bank Exim. BRI is likely to be
maintained as it will float some of its shares to the public.

The four remaining banks would be BNI, BDN, Bank Exim and BRI,
the daily reported.

"I know that many things have been reported in the press. But
don't ask me now for details of the planned merger or
consolidation," Mar'ie said. (rid)