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Bank PDFCI and Bank Danamon PT Bank Danamon Indonesia Tbk was established in 1956 under the name of PT Bank Kopra Indonesia, in 1976, the Bank's name was changed to the present name, Bank Danamon Indonesia. , both of which have been taken over by the Indonesian Banking Restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics).  Agency (IBRA IBRA Indonesian Bank Restructuring Agency
IBRA International Bee Research Association (United Kingdom)
IBRA Interim Biogeographic Regionalisation for Australia
IBRA International Barrel Racing Association
), will soon merge together after they hold their Extraordinary General Meetings of Shareholders late in August 1999. In consistence con·sis·tence  

Noun 1. consistence - a harmonious uniformity or agreement among things or parts
 with IBRA's recapitalization Recapitalization

Restructuring a company's debt and equity mixture often with the aim of making a company's capital structure more stable.

Companies often want to diversify their debt-to-equity ratio to improve liquidity.
 program, the merger of the two banks--which were taken over by the agency in April 1998--aims at making Danamon Bank into a core bank so that it can have a competitive edge and competitive power in the current era of globalization globalization

Process by which the experience of everyday life, marked by the diffusion of commodities and ideas, is becoming standardized around the world. Factors that have contributed to globalization include increasingly sophisticated communications and transportation

In the case where the Extraordinary General Meetings of Shareholders of the two banks agree, Bank Danamon will survive the merger while Bank PDFCI will dissolve A Web site design technique borrowed from the film and video industry in which the transition between two Web pages is represented visually by one page fading into another. Also known as a "soft cut," the result is achieved in the HTML coding of the images to gradual pre-determined  itself without undergoing a liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts.

A type of proceeding pursuant to federal Bankruptcy
 process. Therefore, the bank resulting from the merger will retain its name: PT Bank Danamon Indonesia Tbk.

Shareholding composition to change

If the plan on the merger between Bank PDFCI and Bank Danamon is implemented, this will not only change the shareholding composition and capital structure of the surviving bank but also improve its financial performance and soundness level.

Currently, the two banks' series-B shares are majority-owned by IBRA as a result of the latter's April 1998 acquisition of the former. Furthermore, both Bank PDFCI and Bank Danamon are publicly listed and, as such, they are also partly owned by the public on the capital market. However, in terms of their series-A shares, Bank Danamon is 0.49% owned by PT Bank Danamon International while Bank PDFCI is 0.53% owned by six shareholders.

In line with the outcomes of the due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired.  process and with the agreement which has been made, the merger will result in the ownership of shares by each of the shareholders in the surviving bank being dilluted in proportion to the percentage of their share ownership in each of the merged banks. Since the intrinsic value Intrinsic Value

1. The value of a company or an asset based on an underlying perception of the value.

2. For call options, this is the difference between the underlying stock's price and the strike price.
 of every share issued by both banks is the same, the basis for the calculations used in converting PDFCI shares into Danamon shares will be the volume of shares owned in Bank Danamon and in Bank PDFCI, irrespective of irrespective of
Without consideration of; regardless of.

irrespective of
preposition despite 
 any share classifications or of the nominal value Nominal Value

The stated value of an issued security that remains fixed, as opposed to its market value, which fluctuates.

When referring to fixed-income securities, the nominal value is also the face value.
 of each share.

With the assumption that the composition of shareholders following the merger will be the same as it is now, the ownership by each shareholder of shares in the surviving bank will be smaller that it is now both in terms of volume and in terms of value.

Table - 1

Shareholding composition of Bank Danamon and Bank PDFCI before and after merger
                                     Volume of        Value of
                                      shares           shares
Detail                            (million share)   (Rp billion)

A. Before merger

Bank Danamon.
Series-A shares with a nominal
value of Rp 500
- PT Bank Danamon International        1,075.2          537.6
- Public                               1,164.8          582.4
Series-B share with a
nominal Rp 5
- IBRA                               215,030.8         1075.1
- Public                                   9.1            0.05

Total                                217,280.0        2,195.2

Series-A shares with a
nominal value of Rp 1,000
-PT Bahana Investa Argha Tbk              56.2           56.2
-PT Pan Indonesia Bank Tbk                15.6           15.6
-PT Lippo Bank Tbk                        14.1           14.1
-The Nippon Credit Bank Ltd               13.7           13.7
-Good Spirit Investment Corp              11.8           11.8
-Bank Indonesia                           10.9           10.9
-Public                                   65.2           65.2
Series-B share with a nominal
value of Rp 5
-IBRA                                 22,499.8          112.5
-Public                                    0.2            0.0

Total                                 22,687.5          300.0

B. After merger

Series-A share with a
nominal value of Rp 500
- PT Bank Danamon International        1,075.20         537.60
- Public                               1,164.79         582.40
Series-B share with a
nominal value of Rp 5
- IBRA                               260,030.49       1,300.15
- PT Bahana Investa Argha                112.43           0.56
- PT Pan Indonesia Bank Tbk               32.16           0.16
- PT Lippo Bank Tbk                       28.14           0.14
- The Nippon Credit Bank Ltd              27.48           0.14
- Good Spirit Investment Corp             23.65           0.12
- Bank Indonesia                          21.78           0.11
- Public                                 139.87           0.70

Total                                262,655.00       2,422.07


A. Before merger

Bank Danamon.
Series-A shares with a nominal
value of Rp 500
- PT Bank Danamon International       0.49
- Public                              0.54
Series-B share with a
nominal Rp 5
- IBRA                               98.96
- Public                              0.01

Total                               100.00

Series-A shares with a
nominal value of Rp 1,000
-PT Bahana Investa Argha Tbk          0.25
-PT Pan Indonesia Bank Tbk            0.07
-PT Lippo Bank Tbk                    0.06
-The Nippon Credit Bank Ltd           0.05
-Good Spirit Investment Corp          0.05
-Bank Indonesia                       0.05
-Public                               0.29
Series-B share with a
nominal value of Rp 5
-IBRA                                99.16
-Public                               0.01

Total                               100.00

B. After merger

Series-A share with a
nominal value of Rp 500
- PT Bank Danamon International       0.41
- Public                              0.44
Series-B share with a
nominal value of Rp 5
- IBRA                               99.00
- PT Bahana Investa Argha             0.04
- PT Pan Indonesia Bank Tbk           0.01
- PT Lippo Bank Tbk                   0.01
- The Nippon Credit Bank Ltd          0.01
- Good Spirit Investment Corp         0.01
- Bank Indonesia                      0.01
- Public                              0.06

Total                               100.00

Source: Data Consult

Paid-in capital Paid-in capital

Capital received from investors in exchange for stock, but not stock from capital generated from earnings or donated. This account includes capital stock and contributions of stockholders credited to accounts other than capital stock.
 to increase

In addition to the entry of Bank PDFCI's assets, shares, and liabilities into Bank Danamon, another topic which will be discussed during Bank Danamon's Extraordinary General Meeting of Shareholders is the possibility of increasing the bank's issued and paid-in capital by capitalizing on the spread in value between restructuring transactions. According to according to
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

 the plan, the proceeds of these transactions will be in the form of bonus shares which will be distributed among the surviving bank's shareholders on a proportional proportional

values expressed as a proportion of the total number of values in a series.

proportional dwarf
the patient is a miniature without disproportionate reductions or enlargements of body parts.

Within the context of issuing new shares, Bank Danamon also requires that its by-law be amended to allow it to increase its authorized capital. In the upcoming merger, every PDFCI share will be replaced with a Bank-Danamon series-B share. Therefore, Bank Danamon's plan to increase its authorized, issued, and paid-up capital will affect only its series-B shares.

The brief prospectus concerning the merger of the two banks shows that Bank Danamon's authorized capital will be increased from Rp 2.2 trillion One thousand times one billion, which is 1, followed by 12 zeros, or 10 to the 12th power. See space/time.

(mathematics) trillion - In Britain, France, and Germany, 10^18 or a million cubed.

In the USA and Canada, 10^12.
 in 218 billion shares (prior to merger) to Rp 9.7 trillion in 1.7 trillion shares. On the other hand, its issued and paid-up capital will be increased from Rp 2.2 trillion in 217 billion shares to Rp 2.4 trillion in 262 billion shares.

Table - 2

Bank Danamon's shareholding composition before and after merger
                              Before merger

                         Volume of       Nominal
                          shares          value
Details               (million share)   (Rp bill.)

Authorized capital
- Series-A (Nominal
  value Rp 500)            2,240.0       1,120.0
- Series-B (Nominal
  value Rp 5)            216,000.0       1,080.0

Total                    218,240.0       2,200.0

Issued and paid-up
- Series-A (Nominal
  value Rp 500)            2,240.0       1,120.0
- Series-B (Nominal
  value Rp 5)            215,040.0       1,075.2

Total                    217,280.0       2,195.2

                             After merger

                         Number of     Nominal
                          shares        value
Details               (mill. share)   (Rp bill.)

Authorized capital
- Series-A (Nominal
  value Rp 500)            2,240.0     1,120.0
- Series-B (Nominal
  value Rp 5)          1,713,660.0     8,568.3

Total                  1,715,900.0     9,688.3

Issued and paid-up
- Series-A (Nominal
  value Rp 500)            2,240.0     1,120.0
- Series-B (Nominal
  value Rp 5)            260,415.0     1,302.1

Total                    262,655.0     2,422.1

Source: Data Consult

Liquidity and solvability solv·a·ble  
Possible to solve: solvable problems; a solvable riddle.


As has been mentioned earlier, one objective of the merger between Bank Danamon and Bank PDFCI is to increase the former's capital structure so that it can eventually become a core bank. Another objective is to improve Bank Danamon's efficiency through the resulting synergy The enhanced result of two or more people, groups or organizations working together. In other words, one and one equals three! It comes from the Greek "synergia," which means joint work and cooperative action.  so that the bank can achieve its economy of scale. One indicator of successful synergy is an improvement in liquidity, rentability, and solvability.

The banking sector's end-of-May 1999 financial data show that both Bank PDFCI and Bank Danamon, in addition to other banks, have been suffering considerable financial losses, resulting in their rentability being very poor. However, since the total value of Bank PDFCI's liabilities is much smaller than that of Bank Danamon's, the liquidity and solvability of the former are better than those of the latter.

If the merger between the two banks had taken place late in May 1999, some improvement would have been achieved in terms of the surviving bank's financial performance. Bank Danamon's liquidity level would have increased from only 113.8% prior to the merger to 122.4% after the merger, indicating better liquidity. Similarly, its solvability level would have dropped slightly from 894.4% to 890.6%, indicating better solvability.

Table - 3

Bank Danamon's financial data before and after merger if the merger had been taken place in end of May 1999 (Rp billion)
                              Bank        Bank       resulting
Details                       PDFCI      Danamon    from merger

Total assets                 2,256.2    30,417.5      32,673.7
current assets               2,219.6    26,247.8      28,467.4
Fixed assets                     7.9       204.8         212.6
Other assets                    28.8     3,964.9       3,993.7
Total liabilities            2,016.7    27,358.7      29,375.4
Current liabilities            192.9    23,072.1      23,265.0
Loans received               1,296.5     2,572.1       3,868.6
Other liabilities              527.3     1,714.5       2,241.8
Equity                         239.5     3,058.8       3,298.3
Interest income                 57.0     1,380.9       1,437.8
Interest cost                  329.8     4,777.3       5,107.0
Net interest income           (272.8)   (3,396.4)     (3,669.2)
Operating profit              (117.7)   (5,256.0)     (5,373.7)
Net profit                    (107.6)   (5,243.9)     (5,351.5)
Ratios (%):
- Current assets/current      1150.6       113.8         122.4
- Net profit/total assets       (4.8)      (17.2)        (16.4)
- Net profit/total capital     (44.9)     (171.4)       (162.2)
- Total liabilities/equity     842.0       894.4         890.6
- Net income/total assets      (12.1)      (11.2)        (11.2)

Source: Data Consult3
COPYRIGHT 1999 P.T. Data Consult, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1999 Gale, Cengage Learning. All rights reserved.

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Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Aug 24, 1999

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