Business

Bank Indonesia clears Niaga
Bank, LippoBank merger

Bank Indonesia (BI) has cleared a plan for Bank CIMB Niaga and LippoBank to merge before the end of this year.

The approval, issued on Oct. 15, will pave the way for the first merger to be performed in compliance with BI's single presence policy, which states no institution may have a majority stake in more than one bank.

The merger will see Niaga and Lippo join under the name CIMB Niaga. Their businesses are expected to be fully integrated by the end of 2009.

"We will immediately resolve the merger process, where the planned results would turn the two into Indonesia's fifth largest bank by assets," chief executive Dato' Nazir Razak of CIMB group told a media briefing Thursday.

The two banks had previously agreed to consolidate their businesses in June this year. Based on the agreement, CIMB Group will own 58.7 percent or 81.3 percent of Niaga's total shares.

As of May, Niaga had Rp 56.14 trillion (US$6.14 billion) in assets, according to the central bank.

Niaga, the country's number six bank by assets, was ranked below Bank Danamon Indonesia, which had Rp 93.04 trillion in assets in May.

Lippo had Rp 39.73 trillion in assets in March.

CIMB is Malaysia's second-largest financial services provider, listed on Bursa Malaysia through Bumiputra-Commerce Holdings Berhad (BHCB) with a market capitalization of about US$10 billion.

"The strength of CIMB Niaga and Lippo will compliment and mutually support the universal banking model that CIMB adheres to, making it into a single unit that is ready to compete and progress in the market," Nazir said, as quoted by kompas.com

The two banks are expected to complete the merger by November. (amr)

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