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rivate lender Bank Pundi (BEKS) has found solace in the Banten administration as it expects the upcoming takeover by the latter will help salvage its business.

Pundi hopes that the takeover — to be carried out by the administration’s wholly owned firm Banten Global Development (BGD) — will bring fresh potential as it gradually transforms into a regional development bank.

The new status will allow the publicly listed Pundi to diversify its commercial and consumer segments by tapping into the Banten civil servant and pensioner markets, which Pundi operational director Maximianus P. Djiwanto described as captive markets.

“At the same time, we can facilitate projects run by various regional-owned companies in Banten. It’s going to be more secure with the assistance of regional budget funds,” he said during a public exposé on Monday.

The Banten administration has long expressed its intent to establish its own bank and to separate the business from the one currently managed by Bank Jabar Banten. It has prepared Rp 950 billion (US$72.24 million) for the BGD to take over Pundi.

The acquisition will run in several stages. The first stage will see Pundi hold a rights issue in August, during which the BGD will acquire 35 to 37 percent of shares in Pundi.

Pundi hopes to see its paid-in capital increase to Rp 1.7 trillion after the rights issue, up from the current Rp 1.07 trillion.

The bank will then hold another rights issue in November and a share sale in February 2017. BGD expects to become majority shareholder with about a 68 percent stake by then.

Data from Pundi show that Recapital Securities currently has the largest share of the bank with 67.9 percent, followed by IF Services Netherlands BV with 13.3 percent, Pershing LLC with 10.5 percent and the public with 8.3 percent.

Recapital Securities is part of Recapital Group, which was founded by businessmen Rosan Roeslani, Sandiaga Uno and Elvin Ramli. Rosan currently serves as chairman of the Indonesian Chamber of Commerce and Industry (Kadin), while Sandiaga now hopes to become the next Jakarta governor.

Maximianus said in the current economic slowdown the bank needed shareholders that could bring back business “because it’s difficult to run businesses organically these days”.

The bank is deep in the red as it suffered from net losses for the past six consecutive quarters. It posted Rp 80.15 billion in net losses, according to its first-quarter financial report.

It attributes the skyrocketing bad loans to weak domestic and global economies that have worsened the situation. Its gross non-performing loans (NPL) stood at 6.3 percent in March, exceeding the 5 percent benchmark set by the Financial Services Authority (OJK), while the net NPL reached 4.9 percent.

“There are several factors contributing to the high level of NPL. The economic weakening in several regions, for instance, has led to a decline of commodity prices, including palm oil in Sumatra,” Bank Pundi business director Beni Nurtantijo said. “We are affected because we fund commodity-related businesses.”

Lungguk Gultom, Pundi’s acting president director, said it put several efficiency measures in place to strengthen internal consolidation and improve asset quality while waiting for the BGD to complete the takeover.

It shut down dozens of its branches nationwide, from 197 offices to only 169, in December 2015. It also laid off about 300 workers during the first three months of this year, leaving the remaining 4,000 in a state of uncertainty.

“[The layoffs] will continue in line with our efficiency measures,” said Maximianus. (vps)