Permata Bank has issued US$100 million of bonds to finance debt in support of business expansion and strengthen its capital structure, the bank said in a statement Tuesday.
Standard Chartered Bank Indonesia and PT Astra International, Indonesia's largest car retailer, acted as the principal buyers for the issuance of the 12-year subordinated medium-term notes.
Standard Chartered and Astra own 44.5 percent each of Permata, while the remaining 11 percent is owned by the public.
Through the issuance, Permata will increase its level of capital relative to risk weighted assets, enhancing its capital adequacy ratio (CAR), the bank said, exceeding the central bank's minimum requirement of 8 percent.
"This issuance demonstrates our shareholders' strong support for Permata Bank and our long-term strategy," said Stewart D. Hall, the bank president director.
"Whilst the quality of our balance sheet remains strong, we recognize that in this fast-changing environment there has been a shift in market expectations on the appropriate level of capital.
"We see merit in having more capital than we need in these extraordinary times ... having more capital will give us even greater flexibility to take advantage of growth opportunities," he said.
Following the global liquidity crunch, triggered by the Western banking and financial crisis, Indonesian banks have strengthened their capital base to cushion themselves against negative impacts.
Two smaller banks - Bank Century and Bank IFI - have become victims of the liquidity crunch since the crash in October last year.
Century was taken over by the government, through the Deposit Insurance Corporation (LPS), after its capital plunged, as the bank's capital structure was mostly in the form of securities.
IFI was liquidated by the central bank as its CAR plunged due to a rise in non-performing loans (NPLs).
The average rate of gross NPLs (for all banks) has continued to rise since December 2008, from 3.8 percent to 4.6 percent in April.
The central bank's maximum tolerance of gross NPLs is 5 percent.
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