Nusamba banks' merger to pool assets of $1.7b

JAKARTA (JP): Four private banks under the Nusamba Group have agreed to merge to create a new bank with combined assets worth Rp 21.2 trillion (US$1.76 billion).

The banks -- Bank Duta, Bank Umum Nasional (BUN), Bank Bukopin, and Bank Tugu -- signed the memorandum of understanding for the merger Saturday.

The publicly listed Bank Duta president Muchtar Mandala said the new bank was expected to be formed by the end of June.

"The process to merge has been smooth because of the matching perception and the closed relations between the four banks' main shareholders," Muchtar told reporters after the signing of the merger agreement.

Muchtar was accompanied by the presidents of the publicly listed BUN Leonard Tanubrata, Bukopin Indra Kesuma, and Bank Tugu Ari Prabowo at the signing ceremony.

The consolidation of the four banks will create a new bank, with equity amounting to Rp 1.39 trillion and a paid-up capital of Rp 756.23 billion. It will have 300 branches and 300 Automatic Teller Machines.

Nusamba Group, owned by President Soeharto's four foundations, is headed by timber mogul Muhammad "Bob" Hasan, who is also the chief commissioner of BUN, Bukopin and Bank Duta.

The four banks are the second group of private banks to have formally agreed on a merger plan.

Bank International Indonesia and Bank Dagang Nasional Indonesia, two of Indonesia's largest private banks, have agreed to merge with Bank Tiara Asia, Bank Sahid Gajah Perkasa and Bank Dewa Rutji, creating a bank with Rp 50 trillion in assets.

Other private banks have informally disclosed their plans to consolidate, in compliance with the International Monetary Funds' supported economic reforms to consolidate the country's frail banking sector.

The widely diversified Bakri Group is expected to merge its four banks next month, the Tirtamas Group is preparing to merge its three banks, and the Ramako Group will merge its two banks.

The government led the move when it announced earlier this year it would merge four state banks -- Bank Ekspor Impor Indonesia, Bank Dagang Negara, Bank Bumi Daya and Bank Pembangunan Indonesia.

Bob Hasan, a longtime confidante of Soeharto, said the new bank would strictly separate the tasks of management and the owners.

"The operational management of the bank will be handled solely by the professionals, the owners cannot become a member of the board of directors in the new bank," he said.

He said the four banks to be merged would form a new body to take care of their bad debts.

Bank Duta reported its assets reached Rp 6.3 trillion and its equity reached Rp 489.8 billion as of Dec. 31 last year. The bank booked Rp 82.3 billion in before-tax profit last year.

BUN's total assets in the same period was Rp 9.3 trillion, and its equity Rp 568.3 billion. The bank's before-tax profit was Rp 76.6 billion last year.

Bank Bukopin's total assets as of the end of last year was Rp 5.1 trillion and its equity Rp 265.8 billion, while last year's profit before tax was Rp 50.5 billion.

Bank Tugu's total assets was Rp 330.2 billion, its equity Rp 71.2 billion while its before-tax profit last year was Rp 71.2 billion.

The banks said they would provide opportunities for other banks to join the merger. (das)