IBRA appoints Andersen to advise bank merger

The Jakarta Post, Jakarta

The Indonesian Bank Restructuring Agency (IBRA) said it had appointed consulting firm Arthur Andersen as its financial advisor for the merger of five banks, among them Bank Bali and Bank Universal.

The agency said the appointment followed a bidding process.

Andersen will manage the project in tandem with the Center for Investment and Business Advice (CIBA), under the name CIBA/Andersen.

"They (CIBA/Andersen) will coordinate the entire process for the merger, the due diligence, financial advice, and so forth," IBRA spokesman Suryo Susilo told The Jakarta Post on Saturday.

Slated for merger sometime this year are Bank Bali, Bank Universal, Bank Patriot, Bank Prima Express and Bank Artamedia.

The five banks were unable to meet Bank Indonesia's minimum capital adequacy ratio (CAR) level of eight percent by the end of last year.

CAR is the ratio of a bank's risk-weighted assets, such as loans, against its capital, and is a vital measurement for gauging a bank's financial viability.

There is no timetable yet for the completion of the merger, but IBRA officials have predicted it would take until mid-2002 to wrap up a legal merger.

Under a legal merger, the five banks would become a single entity but would continue to operate separately until fully merged.

Details of the merger plan remain sketchy. Suryo said that one of the banks would become what is known as the coordinating bank, selected on the basis of its management capacity for coordinating the merger process. Yet it does not mean that the other four banks would be merged into it.

"CIBA/Andersen will among other things recommend which of the banks is the most suitable to become the coordinating bank," Suryo said.

Apart from CIBA/Andersen, IBRA has also appointed Hadiputranto, Hadinoto & Partners (HHP) as its legal advisor for the merger.