Permata lowers loan target after request rejected

The Jakarta Post, Jakarta

Bank Permata will revise downward its lending target for this year after the Indonesian Bank Restructuring Agency (IBRA) rejected the publicly listed bank's plans to raise cash through a rights issue or bonds.

Bank Permata vice president Chandra Purnama told reporters on Wednesday that the medium-sized bank would not be able to meet its new loan target of Rp 3 trillion by the end of the year.

"Without the sub-debt bonds issue, our credit expansion will be a bit disrupted. We'll revise the target, but I cannot give a figure yet -- it's still being calculated," Chandra said on the sidelines of a seminar here.

Permata is a merger of five banks -- Bank Universal, Bank Bali, Bank Patriot, Bank Artamedia and Bank Prima Express. With total assets of around Rp 29 trillion, the bank is currently included in the country's top-ten list.

The bank had planned to launch a rights issue or bonds to raise cash to boost its capital adequacy ratio (CAR). A higher CAR level would allow the bank to increase its loan exposure without undermining its capital position.

But IBRA, which owns a majority stake in the bank following a government bailout using public funds, rejected the plan. Approving the rights issue plan would mean that IBRA, a government agency, would have to use public funds again to exercise its rights in order to maintain the same level of ownership.

The agency has told Permata's management to concentrate on increasing profitability as a way of improving the bank's capital position.

As of the first semester of this year, Permata booked a Rp 151.4 billion net profit, up from Rp 47.8 billion in the same period last year.

The bank is now 97.67 percent owned by IBRA, in return for around Rp 11 trillion-worth of recap bonds it injected into the bank, while the public holds the remaining 2.33 percent.