Permata lowers loan target after request rejected

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.