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Pt Bank Buana Indonesia Tbk Business Information, Profile, and History

Jl. Asemka Nos. 32-36
Jakarta Barat 11110
Indonesia

Company Perspectives:

From the very beginning, we have always concentrated our business on catering to the needs of our retail customers, distributors as well as small to medium sized enterprises. These sectors have been proven to endure, even during the most difficult economic periods. Our full commitment to these sectors has paid off as it has allowed us to weather the economic crisis in 1997 and enabled us to achieve a sustainable growth. We will continue to expand our network of offices, human resources, and information technology to reach our mission: to be the most reliable, trusted, and sound bank in the nation in serving small to medium scale businesses.

History of Pt Bank Buana Indonesia Tbk

PT Bank Buana Indonesia Tbk has come through the Asian economic crisis of the late 1990s in fine form. With a rising assets base and stable financial base, Bank Buana has achieved Class A certification from the Bank of Indonesia and has successfully converted into a publicly listed bank. One of Indonesia's top 20 banks, Bank Buana has traditionally focused on the trade finance segment, targeting especially small and mid-sized businesses. The retail distribution market is also a primary target of the group. Bank Buana offers a full range of retail and commercial banking services, including a range of savings products and e-banking services. The company's loans include working capital loans, export-import loans, bank guarantees, and investment loans. Bank Buana serves its market through nearly 150 locations throughout Indonesia, as well as through its eMobile Mbank online service. In 2002, the bank posted total assets of more than IDR 13.2 billion (approximately $1.5 billion).

Origins and Development: 1950s to Early 1990s

PT Bank Buana Indonesia was founded in 1956 as a private bank in Jakarta. The bank remained small, and by the early 1960s found it difficult to keep afloat. In 1965, the bank was bought up by a group of five Indonesian industrial companies, which each took an approximately equal share in Bank Buana. Among the bank's new owners were a producer of glass and a textile manufacture. Owning a bank for these modestly sized businesses was not merely for the prestige but was also a way of cutting back on their own banking charges. Yet the equal shareholder status of the five owners made it difficult to reach agreement over the bank's management policies and long-term strategy. This situation led the bank to adopt a highly conservative approach to growth and to focus its customer portfolio on the trade finance market, rather than on the consumer market.

Nonetheless, Bank Buana grew strongly in the 1970s. Mergers and acquisitions marked the group's expansion during this period, beginning with the 1972 merger with PT Bank Pembinaan Nasional, in Bandung. In 1974, Bank Buana expanded its operations again by absorbing PT Bank Kesejahteraan Masyaraka, in Semarang, and then again, in 1975, by merging with PT Bank Aman Makmur, based in Jakarta.

A turning point for Bank Buana came in 1976, when it was awarded a foreign exchange license--only about 20 percent of Indonesia's many banks were to achieve this status. As such, Bank Buana was able to develop into one of the country's leading foreign currency and trade finance specialists. The bank stepped up its growth through the 1980s, opening more than 100 branch offices throughout the country. By 1990, Bank Buana had become Indonesia's twelfth largest bank.

By the late 1980s, however, Bank Buana's five-way ownership structure, and the inability to reach consensus, had left the bank vulnerable in the buoyant Indonesian banking market. Starting in about 1989, the bank went into a period of relative stagnation; by 1994, it had slipped back to 35th place among the country's top 50 banks. As both its loan portfolio and assets base slipped back, the bank continued to lose ground in the booming Indonesian banking sector.

Fuelled by increasingly liberal government banking policies, the Indonesian economy, and its banking sector, grew quickly in the late 1980s and early 1990s. Bank Buana appeared to sit on the sidelines, while its competitors increasingly gained ground. By the early 1990s, Bank Buana seemed at a standstill in what some observers described as an "overbanked" Indonesian financial market.

Instead of growing its own business, Bank Buana concentrated on forming joint-ventures, partnering with foreign banks seeking entry into the fast-growing Indonesian market. As such, the group formed a joint-venture with Japan's Mitsubishi Bank, named PT Mitsubishi Buana Bank, in 1989. The following year, Bank Buana partnered with DBS Bank and TatLee Bank of Singapore to create DBS Buana TatLee Bank. DBS later took over Mitsubishi's stake in the former bank, which changed its name to DBS Buana Bank, then sold out its stake in the Buana-TatLee partnership, which became Keppel TatLee Buana Bank.

Restructured for Growth in the New Century

The year 1994 marked a significant change for Bank Buana. In that year, the company changed its shareholder structure, placing more than 89 percent of its shares into a newly created holding company, PT Sari Dasa Karsa. At the same time, the bank installed a new management team, which began a more aggressive growth policy. The bank's new management specifically targeted expansion of the bank's loan policy, which grew by some 40 percent into the middle of the decade.

In the second half of the 1990s, Bank Buana's new growth drive had returned it to Indonesia's top 20 banks. However, concerns that the bank was now expanding too fast led management to scale back its growth. Although analysts consistently referred to the group's management strategy as conservative, Bank Buana itself favored "prudent" as a more descriptive term for its strategy. Nonetheless, Bank Buana began preparing for an initial public offering, initially slated for 1997.

The crash of Indonesia's financial community--amid the economic crisis that swept through Asian markets in the late 1990s--put a temporary halt to the group's plans for a stock listing. As the Indonesian banking sector reeled from the sudden collapse of the country's economy, and as many of Bank Buana's competitors slipped into bankruptcy, Bank Buana's more conservative approach enabled it to emerge relatively unscathed from the crisis. Indeed, when the Bank of Indonesia reviewed Bank Buana, it became one of few to receive certification as a Class A financial institution.

Related information about Bank

An organization which offers a wide range of services to do with the handling of money. Most banks are commercial banks, which keep money on behalf of their customers, lend it to them, and offer them such facilities as currency exchange, money transfer, credit facilities, mortgages, and investment advice. A central bank in a country (such as the Bank of England or the Banque de France) is the banker for the government, issuing money on its behalf and setting the chief interest rate for loans; it is much involved in the country's monetary policy. Merchant banks offer specialized services to businesses, such as managing shares, dealing in gold or foreign currencies, and providing funds to finance a new business. Savings banks were founded in the 19th-c to encourage people to save, small deposits being placed in interest-bearing accounts. There are also several international banks, which regulate currency matters between countries and handle international loans, notably the World Bank.

see :wiktionary:banker for more meanings.

A bank is a business that provides banking services for profit. Some banks (called Banks of Issue) issue banknotes as legal tender.

Currently in most jurisdictions the business of banking is regulated and banks require permission to trade. Authorisation to trade is granted by bank regulatory authorities and provide rights to conduct the most fundamental banking services such as accepting deposits and making loans. There are also financial institutions that provide banking services without meeting the legal definition of a bank (see banking institutions).

Banks have a long history, and have influenced economies and politics for centuries.

The word bank is derived from the Italian banca, which is derived from a Germanic language and means bench. In recent history, with historically low interest rates limiting banks' ability to earn money by lending deposited funds, much of a bank's income is provided by overdraft fees and riskier investments.

Services typically offered by banks

Although the type of services offered by a bank depends upon the type of bank and the country, services provided usually include:

Taking deposits from their customers and issuing checking and savings accounts to individuals and businesses
Extending loans to individuals and businesses
Cashing cheques
Facilitating money transactions such as wire transfers and cashiers checks
Issuing credit cards, ATM cards, and debit cards
Storing valuables, particularly in a safe deposit box

Financial transactions can be performed through several different channels:

Branch
ATM
Mail
Telephone
Internet

Types of banks

Banks' activities can be characterised as retail banking, dealing directly with individuals and small businesses, and investment banking, relating to activities on the financial markets. However, some are owned by government, or are non-profit making.

In some jurisdictions retail and investment activities are, or have been, separated by law.

Central banks are non-commercial bodies or government agencies often charged with controlling interest rates and money supply across the whole economy.

Types of retail banks

Commercial bank, is the term used for a normal bank to distinguish it from an investment bank. After the great depression, the U.S. Congress required that banks only engage in banking activities, whereas investment banks were limited to capital markets activities. Since the two no longer have to be under separate ownership, some use the term "commercial bank" to refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses.
Community Banks are locally operated financial institutions that empower employees to make local decisions to serve their customers.
Community development bank are regulated banks that provide financial services and credit to underserved markets or populations.
Postal savings banks are savings banks associated with national postal systems.
Private banks manage the assets of high net worth individuals.
Offshore banks are banks located in jurisdictions with low taxation and regulation. Many offshore banks are essentially private banks.
Savings bank In Europe, savings banks take their roots in the 19th or sometimes even 18th century. Nowadays, European savings banks have kept their focus on retail banking: payments, savings products, credits and insurances for individuals or small and medium-sized enterprises.

Building societies and Landesbanks both conduct retail banking.
Ethical banks are banks that prioritize the transparency of all operations and make only social-responsible investments.

Types of investment banks

Investment banks "underwrite" (guarantee the sale of) stock and bond issues, trade for their own accounts, make markets, and advise corporations on capital markets activities such as mergers and acquisitions.
Merchant banks were traditionally banks which engaged in trade financing. For example, First Bank (a very large bank) is involved in commercial and retail lending, and its subsidiaries in tax-havens offer offshore banking services to customers in other countries. In Europe and Asia, big banks are very diversified groups that, among other services, also distribute insurance, hence the term bancassurance.

Other types of banks

Islamic banks adhere to the concepts of Islamic law. Also, deposit makers earn a share of the bank?s profit as opposed to a predetermined interest.

Banks in the economy

Role in the money supply

A bank raises funds by attracting deposits, borrowing money in the inter-bank market, or issuing financial instruments in the money market or a capital market. The bank then lends out most of these funds to borrowers.

However, it would not be prudent for a bank to lend out all of its balance sheet. Some governments (or their central banks) restrict the proportion of a bank's balance sheet that can be lent out, and use this as a tool for controlling the money supply.

Size of global banking industry

Worldwide assets of the largest 1,000 banks grew 15.5% in 2005 to reach a record $60.5 trillion. The large number of banks in the US is an indicator of its geographical dispersity and regulatory structure resulting in a large number of small to medium sized institutions in its banking system. Risks include liquidity risk (the risk that many depositors will request withdrawals beyond available funds), credit risk (the risk that those that owe money to the bank will not repay), and interest rate risk (the risk that the bank will become unprofitable if rising interest rates force it to pay relatively more on its deposits than it receives on its loans), among others.

Banking crises have developed many times throughout history when one or more risks materialize for a banking sector as a whole. Prominent examples include the U.S. Savings and Loan crisis in 1980s and early 1990s, the Japanese banking crisis during the 1990s, the bank run that occurred during the Great Depression, and the recent liquidation by the central Bank of Nigeria, where about 25 banks were liquidated.

Regulation

The combination of the instability of banks as well as their important facilitating role in the economy led to banking being thoroughly regulated. In addition, banks are usually required to purchase deposit insurance to make sure smaller investors are not wiped out in the event of a bank failure.

Another reason banks are thoroughly regulated is that ultimately, no government can allow the banking system to fail.

Public perceptions of banks

In United States history, the National Bank was a major political issue during the presidency of Andrew Jackson. Jackson fought against the bank as a symbol of greed and profit-mongering, antithetical to the democratic ideals of the United States.

Currently, many people consider that various banking policies take advantage of customers. Specific concerns are policies that permit banks to hold deposited funds for several days, to apply withdrawals before deposits or from greatest to least, which is most likely to cause the greatest overdraft, that allow backdating funds transfers and fee assessments, and that authorize electronic funds transfers despite an overdraft.

In response to the perceived greed and socially-irresponsible all-for-the-profit attitude of banks, in the last few decades a new type of banks called ethical banks have emerged, which only make social-responsible investments (for instance, no investment in the arms industry) and are transparent in all its operations.

In the US, Credit unions have also gained popularity as an alternative financial resource for many consumers. Also, in various European countries, Cooperative banks are regularly gaining market share in retail banking.

Profitability

Large banks in the United States are some of the most profitable corporations, especially relative to the small market shares they have. For example, the largest bank, Citigroup, which for the past 3 years has made more profit than any other company in the world, has only a 5% market share. Merging banking, investment, and insurance functions allows traditional banks to respond to increasing consumer demands for "one stop shopping" by enabling cross-selling of products (which, the banks hope, will also increase profitability).

Bank size information

Top ten banking groups in the world ranked by tier 1 capital

Figures in U.S. dollars, and as at end-2005www.economist.com/markets/indicators/displaystory.cfm?story_id=7141354 The Economist, The world's biggest banks, List of the world's ten largest banks by tier 1 capital at the end of 2005

Citigroup — 60 billion
Royal Bank of Scotland — 38 billion

Top ten banking groups in the world ranked by assets

Figures in U.S. dollars, and as at end-2004www.economist.com/surveys/displaystory.cfm?story_id=6908408 The Economist, Thinking big, List of the world's ten largest banks by assets in 2004

UBS — 1,144 billion
Royal Bank of Scotland — 1,110 billion

Top ten bank holding companies in the world ranked by profit

Figures in U.S. dollars, and as 2003

Citigroup — 10 billion
Royal Bank of Scotland — 4 billion

Top ten banks in the world ranked by market capitalisation

Figures in U.S. dollars, and as at 26 July 2006www.economist.com/displayStory.cfm?story_id=7226067 The Economist, On Citi's tail, List of the world's biggest banks, by market capitalisation, as at 26 June 2006

Citigroup — 110 billion
Royal Bank of Scotland — 95 billion

History of banking

Main article: History of banking

Florentine banking — The Medicis and Pittis among others
Banknotes — The evolution of modern central banking policies
Bank of America — The invention of centralized check and payment processing technology
Swiss bank
United States Banking
History of Money and Banking in the United States by Murray N. History of banking in the Middle-East

Chronology

Key Dates:
1956: PT Bank Buana Indonesia is established in Jakarta.
1965: Bank Buana is acquired by a partnership formed by five industrial companies.
1972: The bank merges with PT Bank Pembinaan Nasional, in Bandung.
1974: PT Bank Kesejahteraan Masyaraka, in Semarang, is acquired.
1975: The bank merges with PT Bank Aman Makmur, based in Jakarta.
1976: Bank Buana is granted a foreign currency license.
1989: The bank forms a joint-venture with Japan's Mitsubishi Bank, PT Mitsubishi Buana Bank (later PT DBS Buana Bank).
1990: A joint-venture is formed with DBS and TatLee, PT DBS TatLee Buana Bank.
1994: A new holding company is created, PT Sari Dasa Karsa, which acquires nearly 90 percent of Bank Buana's shares and installs new management.
1999: The bank receives class A certification from Bank of Indonesia and sells out its share of DBS Buana Bank.
2000: Bank Buana goes public with a listing on the Jakarta Stock Exchange.
2002: The banks lists on the New York Stock Exchange as ADRs.
2003: International Finance Corporation, a subsidiary of the World Bank, acquries seven percent stake in Bank Buana.Bank Buana once again began preparations for its public listing at the end of the 1990s. As part of that process, the bank sold off its share of the DBS Buana joint-venture. Bank Buana went public in July 2000, listing on the Jakarta and Surubaya Stock Exchanges in a successful offering that was several times over-subscribed. The bank continued expanding its shareholder base, adding two new major shareholders in the early 2000s, including PT Makindo Tbk, which boosted its stake in the bank to 6.92 percent in 2002.
Bank Buana split its stock for the first time, in a 2-for-1 split, near the end of 2002. Soon after, Bank Buana was admitted to the New York Stock Exchange as well, where its shares began trading as American Depositary Receipts (ADRs). In April 2003, the International Finance Corporation, a subsidiary of the World Bank, acquired nearly 7 percent of the bank, underscoring Bank Buana's status as one of the country's most stable smaller banks. That purchase reduced PT Sari Dasa Karsa's stake in the bank to just over 55 percent.
Despite its commitment to a conservative management strategy, Bank Buana continued to display strong growth at the beginning of the 2000s. By the end of 2003, the bank was able to forecast growth of some 10 percent over the previous year, when its total assets topped IDR 13 billion ($1.5 billion). Although tiny by international standards, Bank Buana, through its commitment to its core trade finance business, could claim a place as one of Indonesia's most respected small banks.

Additional topics

Company HistoryFinance: Banks & Credit

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