No layoffs in banking merger: Bank CIC

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.