Thu, 04 Aug 1994

Technical aid extended to Continental Bank

JAKARTA (JP): The technical assistance extended to Continental Bank from a consortium of three other banks may lead to a take- over, say executives.

Executives of the consortium, comprising of Bank Utama, Bank Danamon and Bank Central Asia, said yesterday that the technical assistance could be expanded into another agreement on financial assistance or equity injection.

"The present stage of the cooperation is still limited to technical assistance. But the possibility of taking over the Continental Bank is still there," said Jusuf Arbianto, managing director of Bank Danamon.

Yusuf said that his bank and the other two banks were invited by the Continental Bank to improve its management and "as friends, we agreed to do so."

Speaking to newsmen following his presentation in a two-day seminar on banking ethics held by the Association of Private Domestic Banks (Perbanas), Yusuf said the technical assistance extended to the Continental Bank was different from that extended to Bank Sampoerna.

Bank Danamon previously used the technical assistance as a bridge for taking over the ailing Bank Sampoerna, formerly owned by the Sampoerna Group.

Trenggono Purwosuprodjo, the president of Bank Utama, also had the same view about the technical assistance for the Continental Bank.


He said the cooperation agreement with the Continental Bank is limited only to technical assistance and that the consortium had set a special team comprising of 25 skilled personnel to carry out the assistance.

A reliable source, however, said that they believed the technical assistance could be used as camouflage for takeover arrangements towards the Continental Bank.

The sources, who requested for anonymity, said that the owner of the Continental Bank is likely to sell his shares in the bank to solve his business group's financial difficulties.

Sugiantoro, the president of the Continental Bank, told The Jakarta Post earlier that Lily Sumantri, the major shareholder of the bank, is an independent businessman and that he has no relations with any business group.

According to the sources, Sumantri is the owner of the Continental business group, which incurred a huge amount of debt in the ailing Bank Bapindo.

Sugiantoro said that the Continental Bank, with total assets of around Rp 509 billion (US$242.38 million) as of March, has a capital adequacy ratio (CAR) of above eight percent, the minimum level set by Bank Indonesia (the central bank).

The bank's loan-to-deposit ratio (LDR) is around 111 percent, a little bit higher than the maximum level of 110 percent set by Bank Indonesia.(hen)