Unlisted state banks may be merged, minister says

Unlisted state banks may be merged, minister says

Leony Aurora, The Jakarta Post, Jakarta

The government is considering merging unlisted state banks with
bigger, healthier publicly listed ones, a senior official says.

State Minister of State Enterprises Sugiharto told reporters
on Tuesday that his office would first look into the performance
of two unlisted state banks -- Bank Ekspor Indonesia (BEI) and
Bank Tabungan Negara (BTN) -- to determine whether they had
achieved their 2004 targets.

"If they failed (to reach their targets), I will review them
with a mind to merging them with publicly listed (state) banks,"
said the minister.

State banks that have gone public are Bank Mandiri, the
country's largest bank in terms of assets, second biggest lender
Bank Negara Indonesia (BNI) and Bank Rakyat Indonesia (BRI).

All three banks have started looking into the possibility of
acquiring or merging with other financial institutions,
particularly after Bank Indonesia relaxed the regulation on the
legal lending limit (LLL).

The new policy, issued to fast-track consolidation in the
country's banking sector, stipulates that money injected by one
bank into another will not be calculated in its LLL, as long as
financial reports of the corresponding banks were consolidated.

BNI president Sigit Pramono said earlier that the bank
intended to buy out one bank this year to add to its value before
divesting 30 percent of its shares in May or June.

Sugiharto further said that his office might still allow
unlisted state banks to issue bonds, if deemed appropriate.

BEI is planning a Rp 500 billion (US$54.55 million) bond
issuance in the second quarter of this year to cover some Rp 300
billion in mid-term promissory notes that mature in June. The
rest of the proceeds will be used to strengthen its working
capital.

In its five-year plan, the bank plans to become an export
credit agency and aims to expand export credit by between 10
percent and 15 percent per year.

In the first nine months of 2004, BEI booked an unaudited net
profit of Rp 127 billion. Its assets stand at about Rp 7.4
trillion.

BTN, which channels 90 percent of its loans to the housing
sector, also plans a bond issuance worth Rp 750 billion in this
year's first semester. The bonds will have coupon rates of
between 11.5 percent and 12 percent.

In previous media reports, the bank said it would allocate
about Rp 4 trillion for loans. By the end of 2004, outstanding
loans stood at Rp 12.6 trillion, with gross nonperforming loans
accounting for 3.4 percent of the amount.