•    HOME   
•    NEWS   
•    BUSINESS   
•    INTERNATIONAL   
•    TECH   
•    SPORTS   
•    LIFE & TIMES   
•    OPINION   
•    MY JAKARTA   
•    BLOGS   

Private equity firm PT Recapital Advisers has abandoned plans to buy troubled PT Bank Eksekutif Internasional from the Widjaja family, opting instead to participate in the bank’s rights issue.

“Recapital will become a stand-by buyer for our rights issue,” Ghandi Ganda Putra, the bank’s president director, told reporters on Friday. He added that shareholders had agreed on the same day to issue new shares to raise badly needed capital.

Recapital said last month that it had been conducting due diligence on Bank Eksekutif with a view to purchasing the family’s 79 percent stake. Recapital offered no reason for its change of heart and could not be reached for comment.

The rights issue is planned for June and will generate Rp 300 billion to Rp 500 billion ($33 million to $55 million) in proceeds, Ghandi said.

The rights issue is the best solution for the bank’s problems with bad loans and scarce capital, he said, because funds from the share sale would flow directly into the bank, whereas an outright sale of the lender would simply put the cash in the Widjaja family’s pockets.

“The proceeds will lift the bank’s capital adequacy ratio to 18 percent or 20 percent, from 10.8 percent,” he added.

The central bank warned Bank Eksekutif last month to resolve its loan and capital crisis after its capital adequacy ratio, a measure of a bank’s ability to manage risk, fell below the 8 percent minimum.

Ghandi said Recapital had also injected Rp 180 billion into Bank Eksekutif, raising the lender’s third-party funds to Rp 1.1 trillion. In addition, Ghandi said Lusiana Widjaja had added Rp 8.5 billion, which could not be withdrawn for one year.

Analysts say that small banks currently suffering from a shortage of capital may become a target for acquisition by local and foreign investors.