Lippo Bank California gets US$6m infusion

Lippo Bank California gets US$6m infusion

LOS ANGELES (Reuter): Lippo Bank California said on Thursday that it has received an infusion of US$6 million in new capital and the bank established a cost cutting plan to restore it to profitability.

The capital infusion came from James Riady, the bank's majority shareholder, and is coupled to a rigorous cost-cutting plan that will eliminate about $1.2 million from its annual overhead once fully implemented, the bank said.

The bank is disposing of a group of non-performing real estate loans under the cost cutting plan, it said.

The plan will expedite Lippo's goals of improved earnings, capital and asset quality, as required by a recent Federal Deposit Insurance Corp. (FDIC) order, the bank said.

The cost reduction plan includes the elimination of 20 positions, some of which will be accomplished through early retirement, transferring certain operations to its San Francisco office and subletting a portion of office space at its headquarters building in Los Angeles, the bank said.

Lippo's total loan portfolio will shrink by $10 million while it resolves overall asset quality, the company said.

Riady owns both Lippo Bank California and Indonesia's Lippo Group. However, Lippo Bank California is separate from the Lippo Group's PT Lippo Bank.