No layoffs in banking merger: Bank CIC
The Jakarta Post, Jakarta
The merger of Bank Pikko, Bank CIC and Bank Danpac -- to be completed this week -- will not lead to layoffs as the resulting bank will be controlled by the same majority shareholders, Bank CIC said.
"In this process, the management will not dismiss any of the workers," said Anwary Surjaudajam, president of Bank CIC, chosen as the surviving bank in the merger, although the resulting bank will be called Bank Century.
Chinkara Limited Capital, an investment company based in the Bahamas, owns 85 percent of Pikko, 55 percent of Danpac and 16.2 percent of CIC.
However, each employee will be given the choice of staying with the new bank or leaving, Anwary said in a media statement issued on Saturday.
"What is more important is that, despite the merger process, our services to customers will carry on as normal and will not be distracted by this process," he said.
The merger was proposed by Chinkara earlier this year in order to create a stronger bank. The three banks were chosen for the merger based on the synergy between each bank's specific strengths.
Bank CIC's main focus is export financing and currency trading, while Danpac and Pikko are strong in retail and corporate lending, especially in Greater Jakarta and the regions, respectively.
As of last year, CIC had Rp 6.5 trillion in assets with branch offices in 15 cities nationwide. Danpac has Rp 1.15 trillion in assets and 11 branches, while Pikko has Rp 1.4 trillion in assets and 15 branches.
The merger is also in line with the central bank's suggestion that acquisitions and mergers be taken advantage of to consolidate the nation's banking sector -- not only to boost capital, but more importantly to squeeze out sick banks in the process.
The resulting Bank Century is expected to boast total assets of Rp 8.1 trillion, third-party liabilities of Rp 6.2 trillion, with the loan-to-deposit ratio and non-performing loans at 35 percent and 1.7 percent, respectively.
Its capital adequacy ratio (CAR), which compares the bank's capital with its risk-weighted assets, including loans, will be 12.8 percent, well above the central bank's minimum requirement of 8 percent.
The CAR, however, is expected to go up along with a planned rights issue for the resulting bank. A rights issue means issuing new shares to strengthen capital, although one consequence of new investors coming in is that the share-ownership composition is changed.
CIC has said that Klaas Consultant Inc., Singapore-based investment firm, has agreed to set aside US$20.64 million for the issue. According to CIC director Hamidi, this amount will likely be reflected in about 13 percent of ownership in the new bank.
"By rough calculations, even if in the next rights issue Chinkara decides not to increase its capital, it will still own about a 16 percent stake in the resulting bank," said Hamidi, replying to questions about whether Klaas would take over as the bank's majority shareholder after the rights issue.
Hamidi also said domestic investors were keen to take part in the rights issue, having set aside about Rp 200 billion for the event. He did not identify the domestic investors.
With a branch office in Singapore, Chinkara has invested heavily in Southeast Asia. It has invested in several companies in Indonesia, including the three banks.