Tiara, Mashill banks discuss merger

JAKARTA (JP): Bank Indonesia's managing director for supervision of commercial banks, Hendrobudiyanto, acknowledged yesterday that Bank Tiara and Bank Mashill are negotiating a merger.

"There are some discussions between Bank Tiara and Bank Mashill about their merger plan," he told announced to clarify rumors about the two banks' merger plan.

He, however, said the two banks, which are both listed on the Jakarta Stock Exchange (JSX), have not yet formally asked for approval from the central bank to merge.

Hendrobudiyanto said the central bank basically agrees with the two banks' merger plan as long as the purpose of the merger is to create a business synergy.

Sources said that the two banks have reached an initial agreement about merging but they could not sign the deal because of a procedural problem.

Bank Indonesia Governor J. Soedradjad Djiwandono said early this week that the central bank and the Capital Market Supervisory Agency (Bapepam) are currently preparing a regulation to ensure that a merger involving listed banks will not lead to the entry of undesirable people in bank management.

According to the existing regulation, people with a criminal record or those who have a shady background in their business practices in the past are prohibited from having bank shares or becoming bank executives.

Bank Mashill, which was founded in 1989 by the Karta Wijaya family, had total assets of Rp 1.23 trillion as of last December. Its net profit slightly rose to Rp 16.89 billion last year from Rp 16.56 billion in 1994.

A number of local businesspeople made a surprising move early this year to take over a majority stake in a bank, which is now controlled by the Karta Wijaya family. However, the move was foiled by Bapepam.

Bank Tiara, which was listed on the stock exchange in August 1993, is controlled by PT Ometraco. Last year, the bank recorded total assets of Rp 1.31 trillion and a profit of Rp 33.28 billion.

Hendrobudiyanto said yesterday that the central bank's merger ruling covers only mergers among small banks or between small and larger banks.

The ruling was issued early last year as part of its bad debt settlement program. A number of incentives such as a tax break have also been issued to encourage mergers but banks have not yet benefited from it. (hen)