Tahir, the founder and chief executive officer of Mayapada Group. (SP Photo/Ruht Semiono)

Taiwan's Cathay Life Seeks to Increase Ownership in Bank Mayapada


JULY 15, 2020

Jakarta. Cathay Life Insurance, a Taipei-based insurance company, has been working on due diligence to increase its ownership at Bank Mayapada International, an Indonesia's midsize lender founded by local tycoon Tahir, in a move that reflects confidence in the lender's stability and recent improvement, a senior official from Indonesian banking supervisory agency said.

"Cathay is completing its due diligence. Hopefully, next week it will be finished," Slamet Edy Purnomo, the deputy commissioner for banking supervision at the Financial Services Authority (OJK), said on Monday. 

Hariyono Tjahjarijadi, Mayapada's president director, said Cathay Life currently holds 37.33 percent shares in the lender. "They do have a desire to increase their portion as part of their mid- or long-term strategic steps," Hariyono said, referring to the insurer. 

He said Cathay Life planned to increase Mayapada's core capital to at least Rp 30 trillion ($2.1 billion) to qualify the lender as a Tier IV bank in 2022 or 2023 that allow Mayapada to expand its services. 

Hariyono said the ownership structure would change, diluting the shares controlled by Tahir. "Regarding the number of shares and the composition of ownership and when [the take over] will be executed, all are still being prepared by Cathay," Hariyono said

Tahir, however, said there had been no discussion about Cathay Life's plan to take over control of Mayapada and the dilution of his shares in the lender. 

"We haven't talked about that yet," Tahir told Investor Daily. 

Tahir also said that Mayapada's financial condition had improved and stabilized. The tycoon injected Rp 4.5 trillion additional capital that boosts Mayapada's capital adequacy ratio (CAR) to 17.97 percent in April from 13.75 percent in March. The lender's nonperforming loan (NPL) now stood at 6.94 percent with net NPL was at 2.48 percent.

The Supreme Audit Agency (BPK) said last year that Mayapada exceeded the legal lending limit (BMPK), that cap the amount of loan a lender allowed to disburse to a specific business group. Under the country regulation, a bank can only lend up to 10 percent of its capital to an affiliated business group or up to 30 percent to a nonaffiliated party.  

Tahir said, however, that his capital injection has resolved the issue.