State Bank Holding Company May Be Set Up
Monday, 13 November, 2006 | 16:35 WIB

Tempo Interactive, Jakarta: There is a possibility that the government will set up a new company to be called the Indonesia Bank Holding Company, that will manage the activities of all currently existing state banks.

The possibility of setting up this new company is one of the options offered by Sugiharto, the State Minister for State Owned Enterprises SOE, to lower the number of state banks under the single presence banking policy.

The four state banks to be merged are PT Bank Mandiri, PT Bank Negara Indonesia (BNI), PT Bank Rakyat Indonesia (BRI) and PT Bank Tabungan Negara (BTN).

According to Sugiharto, the benefit from establishing the new company as the holding company of four state banks is a structure that is easy to understand and does not need complex management.

“But disadvantages are that synergy is difficult to carry out and multiple taxes can occur in the holding company and the subsidiaries,” said Sugiharto, on Friday (10/11).

In addition to the option of establishing a new company, the government has another option: appoint one of the state banks to be the holding company and the three others become its subsidiaries.

The benefit of this option, according to Sugiharto, is that the holding company's track record is clear and the subsidiaries can still be listed at the stock exchange.

This option also still would allow direct share investment in the subsidiaries.

The disadvantages include the perception that subsidiaries would lose their independence and minority investors will not be able to exchange their shares with the holding company's shares.

Two other options are merger and consolidation.

Merger here would mean to maintain one bank and to merge the other three into it.

Consolidation would mean to establish a new entity by merging the four banks.

These two options are difficult because they are hampered by Government Regulation No.28/1999 on Mergers, Consolidations and Acquisitions.

Budiriza
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