Permata management rejects BNI merger plans

Dadan Wijaksana , The Jakarta Post, Jakarta

Bank Permata's management has rejected a high-profile merger plan with Bank Negara Indonesia (BNI), saying it would prefer focusing on improving its performance to bolster its value ahead of the government's planned divestment program.

While acknowledging the final decision would lay with the government as the bank's majority shareholder, company president Agus Martowardoyo said Permata should instead focus on its core businesses to strengthen its already strong position in the retail and consumer market.

"We want to concentrate on the bank's business performance, so that the government's divestment program can bring about the best possible proceeds," Agus said on Wednesday after the bank's shareholders' meeting.

The government currently holds a 91.3 percent stake in Permata, which it plans to sell sometime this year as part of its divestment program.

However, latest developments show BNI, one of the nation's banking heavyweights, is pursuing a merger with Permata. BNI claims to have secured the approval from Permata over the plan and has already proposed the move to the central bank.

BNI has said the merger would form a perfect synergy as the two banks have different core businesses. While Permata's focus is on the consumer and retail sectors, BNI is predominantly a lender to corporations.

However, president of Permata's board of commissioners Aditiawan Chandra said the bank had never been included in the merger talks -- a situation he strongly criticized.

"The time is over for forced marriages without consent," he said, adding a merger should only be considered as the last option if other moves failed.

"Permata was formed from the merger of five banks -- this has caused a lot of problems. A merger process usually involves (combining) healthy banks with less-healthy banks," he said.

Permata was formed from a merger of five banks controlled by the now-defunct IBRA -- Bank Bali, Bank Universal, Bank Arthamedia, Bank Prima Express and Bank Patriot -- to become the country's 10th-largest lender.

It now boasts around Rp 30 trillion in assets.

In other matters, the bank's shareholders approved a management proposal for a reverse stock split of the bank's share at a ratio of 25:1 to increase its price.

The plan, which will reduce the bank's shares from the current 193 billion to 7.7 billion, is expected to be completed by the second week of June.

"Theoretically, the move will boost the share price from Rp 40 at present to around Rp 1,000 per share," Elvyn G. Masassya, a bank director, said.

The meeting also confirmed the opening of the bank's Islamic- based Syariah business unit.

Syariah banking has started to gain popularity in the country particularly in the past couple of years with a number of major banks have already opened similar operation.