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.