Tiara, Mashill banks discuss merger

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)