P

ublicly listed lender MNC Bank secured on Friday approval from its shareholders to conduct a rights issue in an effort to seek additional funds to strengthen its capital and financial expansion.

The bank, part of the business group owned by tycoon Hary Tanoesoedibjo, obtained the nod during a shareholders meeting, paving the way for the lender to issue 5.31 billion new shares in the second half of the year, which is expected to net Rp 531.1 billion (US$40.36 million) in proceeds.

In addition to the shares, the bank will also issue series III warrants also worth Rp 531.1 billion. Each of the shareholders will be given one warrant, which can be converted into new shares.

“If both actions can be exercised, we can raise funds of more than
Rp 1 trillion this year, so that our total capital will reach Rp 3.1 trillion,” president director Benny Purnomo said after the meeting.

With stronger capital, he said the bank would be better prepared to face the rising competition in the market amid the ASEAN Economic Community’s (AEC) financial liberalization in 2020.

Greater capital, he said, would also help the bank to comply with the Financial Services Authority’s (OJK) regulations, in which every domestic lender should have adequate capital when they plan to expand their network or enter new types of banking business.

“We can also have bigger lending limits [BMPK]. For instance, if we have capital worth Rp 2 trillion, it means we can lend one client one-fifth of the amount, or about Rp 400 billion, which is quite big,” he said.

Benny added that part of the fresh funds would also be allocated to its capital expenditure for IT infrastructure worth Rp 70 billion this year as the bank was building an enhanced electronic channel.

He said the bank already obtained an OJK permit to establish the first stage of a mobile banking service, while also waiting for the second one and a license to start an internet banking system for corporate clients.

MNC Bank’s main shareholder, MNC Kapital, has had big plans for its subsidiary since it acquired the lender two years ago — then named Bank ICB Bumiputera — from the previous majority owners Malaysia’s ICB Banking Group and Indonesia’s AJB Bumiputera 1912.

Since last year, MNC Kapital has been seeking to acquire a local middle-sized lender to be merged with MNC Bank in order to upgrade its status and have wider banking operations.

MNC Kapital president director Darma Putra said previously the merger and acquisitions team was currently monitoring three banks. However, only two banks would be selected to be merged with MNC Bank.

MNC Kapital was once interested in small lender Bank Pundi, part of Recapital Group owned by businessman Sandiaga Uno, and planned to merge it with MNC Bank after an acquisition. However, the plan was ditched as Bank Pundi has entered an acquisition by the Banten provincial administration through its investment arm Banten Global Development.

Benny said the bank was still seeking a prospective partner as the acquisition program remained in its business plan this year. Price is the major issue in its consideration when seeking a partner, alongside a similar type of business culture and financial performance, he added.

He said the acquisition program was part of the bank’s long-term vision in 2019 or 2020 to achieve BUKU III status — which comprises banks with a core capital of between Rp 5 trillion and Rp 30 trillion.