Tirtamas Group plans to merge its 3 banks

JAKARTA (JP): Tirtamas Group will consolidate its banking business by merging its three banks -- Bank Pelita, Bank Papan Sejahtera and Bank Kredit Asia -- into a single bank.

Tirtamas Group will retain the newly acquired Bank Niaga, currently the seventh largest private bank in terms of assets, as a separate bank, the business group said.

The move would strengthen synergy between the various banks under Tirtamas Group in an anticipation of the globalization in the financial services, it said.

The merger, if realized, would bring the combined assets of the three banks to Rp 4 trillion (around US$1.3 billion) and their equity to Rp 500 billion.

There were no details on which of the three banks would survive, but analysts said it would likely be Bank Papan Sejahtera, which is listed on Jakarta and Surabaya stock exchanges.

Details of the merger are expected to be announced by Tirtamas's chairman, Hashim Djojohadikusumo, within the year.

Hashim hinted at the merger plan when speaking to reporters after Bank Niaga's extraordinary shareholders meeting last week.

He said the plan had been reported and approved by Bank Indonesia, the central bank, and could be carried out this year.

"Details of the plan are still being considered," he said.

Bank Papan's director, Al Njoo, speaking on the same occasion, said there would be no overlapping in business between Bank Niaga and the new merger bank given that each had it own market segment.

Bank Niaga, which is also listed on Jakarta and Surabaya stock exchanges, would focus on commercial banking for people in the middle-to-low income group while the other bank would concentrate on home ownership loans, among others, he said.

Tirtamas Group controls 50 percent of Bank Niaga, 19.8 percent of Bank Papan Sejahtera, and wholly owns Bank Pelita and Bank Kredit Asia. Its other financial interests include a 20 percent stake in Merril Lynch Indonesia securities company and 34 percent equity in MetLife Sejahtera Insurance.

Hashim, a son of Indonesia's most senior economist Soemitro Djojohadikusumo, acquired the majority stake in Bank Pelita from Boediarto Boentaran, a local businessman in 1995.

The bank has since developed rapidly with major clients including state electricity company PLN, Bakrie & Brothers and A Latief Corporation. Its assets totaled Rp 813 billion at the end of March.

Bank Kredit Asia, a foreign exchange trader bank, was established in 1991 as Bank Tifa Mayora Sentosa. Its assets totaled Rp 525 billion at the end of June.

Bank Papan Sejahtera, which lends mostly to the housing and property sectors, booked Rp 1.9 trillion in assets at the end of June.

Bank Pelita's president and chief executive officer Agus Anwar said Hashim's business relations had lifted Bank Pelita's performance, while Bank Kredit Asia president Syafril Nur said the performance of the three banks was boosted after Hashim's acquisition.

Tirtamas, the majority shareholder in publicly listed PT Semen Cibinong, has five core businesses: cement, financial services, oil and petrochemicals, international trading and agribusiness.

It also has stakes in Paiton Power Co, which is building a 1,200 Megawatt coal-fired power plant in East Java, the Adaro coal mining operation in South Kalimantan; and PT Indonesia Bulk Terminal, which operates a coal terminal and port in South Kalimantan.

In the petrochemical sector, Tirtamas is developing what is billed as Indonesia's largest integrated olefin and aromatics complex in Tuban, East Java.

Its trading arm, Tirtamas Comexindo, has a network of affiliated companies and representative offices in 28 countries with $400 million in annual turnover.

The group also operates more than 200,000 hectares of tea and oil palm estates. (08)