Lippo, Universal improve CAR levels

JAKARTA (JP): Publicly listed PT Bank Lippo and Bank Universal have become sound banks following the realization of the bank recapitalization at mid year, raising their capital adequacy ratio (CAR) to above 7 percent.

After the recapitalization -- in which the government helped inject Rp 6.05 trillion into Lippo's equity -- the bank's CAR increased to 7.26 percent as of July 31, the bank's president Edi Sindoro told a hearing with the House of Representatives Commission VIII for finance and banking on Tuesday.

CAR is the ratio between net equity and risk-weighted assets. The government considers domestic banks as sound if their CAR levels are 4 percent or above.

"Now Bank Lippo is a sound and solvent bank," Edi said, adding that the bank had raised its net equity from negative Rp 5.6 trillion before the recapitalization (as of Dec. 31) to positive Rp 1.47 trillion afterward (as of July 31).

Edi added that Lippo booked a net income of Rp 11 billion (US$1.4 million) for the month of August alone, after it had netted a cumulative loss of Rp 1.9 trillion during January to July.

Edi anticipated a much lower negative net income this year as compared to last year's Rp 8.3 trillion net loss as the bank had started to make a positive net income in August.

Lippo's shareholders are currently the government with 59.5 percent, the founding shareholder Riady family with 14 percent, foreign strategic partners 8.1 percent and the investing public 18.4 percent.

The bank's total assets before (as of Dec. 31) and after (as of July 31) the recapitalization were Rp 14.4 trillion and Rp 20.2 trillion respectively.

Meanwhile, publicly listed PT Bank Universal said that its CAR as of June 30 increased to 7.8 percent following the injection of a Rp 5.06 trillion bank recapitalization fund, which was mostly funded by the government.

The bank's president, Stephen Satyahadi, said that in the Bank Universal recapitalization program, the government injected Rp 4.1 trillion of the required funds, while founding shareholder PT Astra International supplied Rp 490 billion and the investing public Rp 475 billion.

Stephen said the current shareholders of the bank were the government with 78.91 percent, PT Astra International with 11.53 percent and the investing public with 9.57 percent. (udi)