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tate-owned lender Bank Tabungan Negara (BTN) plans to inject fresh capital into its three new subsidiaries this year with the ambition of becoming the country'€™s seventh largest bank.

BTN president director Maryono said the bank was ready to invest a total Rp 300 billion (US$21.5 million) to establish life insurance and multifinance firms as well as a special purpose vehicle (SPV) to take over its bad assets.

BTN and its joint-partner, state-owned general insurer Asuransi Jasa Indonesia (Jasindo), which inked an agreement in 2013, will build the life insurance firm in the first quarter of the year, with around 60 to 70 percent of the company'€™s stake controlled by the bank.

'€œThe life insurance company'€™s business growth will be supported by both Jasindo and BTN'€™s existing customers, so that we have prospects in two different types of markets,'€ Maryono said after the bank'€™s shareholders meeting on Thursday. Maryono said the life insurer would build a partnership with an international insurance firm that would provide technical assistance in order to be competitive and professional. However, he declined to mention the global company'€™s name. The bank will also create a multifinance company in the second half of this year that will focus on mortgages for people with non-fixed income, adding that '€œwe have yet to find a joint partner for the company.'€

Meanwhile, the SPV, also known as asset management unit (AMU), will take over BTN'€™s bad loans as it aims to reduce its non-performing loans (NPLs) to below 4 percent by the end of this year. '€œThe AMU company will be established perhaps in the second half and we will select our NPLs to be taken over by it,'€ Maryono said.

BTN posted an NPL rate of 3.18 percent as of September, down from 3.63 percent last year.