Bank Jatim Holds 2024 EGMS, Strengthens KUB with Bank Banten and Appoints New Independent Commissioner

Date: 26 september 2024

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SURABAYA, September 26, 2024. PT Bank Pembangunan Daerah Jawa Timur Tbk (bankjatim) held its 2024 Extraordinary General Meeting of Shareholders (EGMS) at the Bromo Room, bankjatim Head Office in Surabaya. The event was attended in person by Acting Governor of East Java, Adhy Karyono, representing the East Java Provincial Government as the controlling shareholder, along with all members of bankjatim’s board of commissioners and board of directors, on Thursday (Sept 26).

The 2024 EGMS of bankjatim covered three agenda items:

1. Amendments to the articles of association;

2. Approval of the company’s corporate action;

3. Changes to the composition of the company’s management.

In his remarks, Adhy Karyono stated that East Java’s current economic condition is excellent, with a growth rate of 4.98 percent—the highest among all provinces on Java Island. “We would also like to express our gratitude to all regents, acting regents, and temporary regents for their contributions to controlling inflation,” he said. According to East Java BPS data, inflation in July 2024 was recorded at 0.04 percent (month-to-month/mtm). Year-on-year inflation (YoY) for July 2024 compared to July 2023 stood at 2.13 percent. This shows that East Java's target of 2.5 percent ± 1 percent remains on track.

Adhy added that one of the discussions in this year’s EGMS involved amending the articles of association related to bankjatim’s Sharia Business Unit (UUS), in accordance with OJK Regulation No. 12 of 2023. Bankjatim is currently working to strengthen its UUS with the long-term goal of evolving into a standalone Sharia bank. “Everyone is hopeful that bankjatim’s UUS can grow rapidly with a well-developed ecosystem due to the vast opportunities,” he said.

Regarding the Inter-Regional Bank Group (Kelompok Usaha Bank or KUB), Adhy emphasized that this is a mandatory corporate action to support regional development banks (BPDs) with minimal core capital. Bankjatim has already initiated KUB processes with Bank NTB Syariah and Bank Lampung. “We are now also in the process with Bank Banten. This is a mandate from the Minister of Home Affairs, and thankfully, East Java can help other provinces through this corporate action,” he asserted.

Adhy also noted that due to the implementation of the Law on Fiscal Balance Between Central and Regional Governments (UU HKPD), East Java stands to lose around Rp 4.2 trillion in revenue. Hence, revitalization and optimization are necessary, including enhancing the ability of regional-owned enterprises (BUMDs) to generate profits and income. “Hopefully, the improved performance of bankjatim can help boost regional income in cities and regencies,” he concluded.

Bankjatim President Director Busrul Iman explained that the bank’s overall performance remains positive. As of August 2024, bankjatim’s assets had reached Rp 103.19 trillion, loan disbursement stood at Rp 60.65 trillion, third-party funds at Rp 82.34 trillion, and net profit at Rp 788 billion.

To strengthen its Sharia business unit, Busrul said, the EGMS approved amendments to the company’s articles of association, in line with OJK Regulation No. 12/2023 concerning Sharia Business Units. Two articles were proposed for amendment:

• Article 16 paragraph 1 on the duties and authority of the Board of Directors, which now includes responsibility for the development of the Sharia Business Unit.

• Article 19 paragraph 2 point D on the duties and authority of the Board of Commissioners, now specifying support for the development of both the company and its Sharia Business Unit.

Bankjatim’s Director of Finance, Treasury & Global Services, Edi Masrianto, elaborated on the second agenda item—corporate action approval. To fulfill its vision of becoming Indonesia’s No. 1 Regional Development Bank (BPD), bankjatim has outlined a strategic plan consisting of five Transformation Pillars, one of which involves capital investment. This corporate action supports inorganic asset growth and has been included in the 2024 Bank Business Plan. “This capital investment action provides both financial and non-financial benefits, including investment diversification, employee career paths, leveraging opportunities, and business collaboration,” he stated.

Regarding bankjatim’s capital strength, based on OJK Regulation No. 12/POJK.03/2021 concerning Commercial Banks, bankjatim is classified in the KBMI 2 category (Commercial Banks Based on Core Capital). With a projected Capital Adequacy Ratio (CAR) of 21.73% by year-end 2024, the company’s capital remains strong, ensuring that this corporate action will not affect its capital adequacy, thus allowing it to proceed with the KUB initiative.

Following decisions made at the 2022 and 2023 Annual General Meetings, bankjatim’s corporate actions involving two BPDs—Bank NTB Syariah and Bank Lampung—were approved. For Bank NTB Syariah, bankjatim received approval from the Financial Services Authority (OJK) for a capital investment of Rp 100 billion on July 5, 2024. The investment was executed on August 16, 2024, and the bank is now preparing the Fit and Proper Test (PKK) for the prospective controlling shareholder under the KUB scheme.

Edi also reported progress with Bank Lampung, which has undergone feasibility studies and due diligence covering finance, taxation, legal, and IT. Currently, audited financial statements and a pro forma report as of June 2024 are being prepared by a public accounting firm, along with a share valuation by a public appraisal service. “We are finalizing the Shareholder Agreement between the Lampung Provincial Government and bankjatim,” he explained.

Bankjatim is also progressing with a KUB initiative involving Bank Banten. Both parties have signed a Memorandum of Understanding (MoU) regarding business cooperation and the formation of a KUB, as well as a Non-Disclosure Agreement (NDA) to exchange information in the framework of this collaboration. The next phase will involve a due diligence process.

“Bankjatim and Bank Banten have engaged in discussions and explored synergies in banking products and services, in line with OJK Regulation No. 12/POJK.03/2020 on Commercial Bank Consolidation,” he said.

Bankjatim believes there is ample opportunity for inorganic growth through KUBs, which can bring added value. This belief is supported by internal and external analyses, legal aspects, market opportunities, capital feasibility studies, risk assessments, performance reviews, and financial projections. Accordingly, through this 2024 EGMS, bankjatim will proceed with capital investment in Bank Banten as part of its structured investment and the KUB formation process outlined in OJK Regulation No. 12/POJK.03/2020. Other structured investments include subordinated loans and loans for civil servant (ASN) credit.

The 2024 EGMS also included an agenda item to change the company’s management structure. Based on the results, Dadang Setiabudi was appointed as a new Independent Commissioner of bankjatim. He previously served as Director of IT & Operations at PT Bank Negara Indonesia (Persero) Tbk from 2018–2020, with his most recent role being Associate Director at PT Torres Global Konsultan.

The composition of bankjatim’s Board of Commissioners and Board of Directors after the 2024 EGMS is as follows:

Independent Commissioner: Muhammad Mas’ud
Independent Commissioner: Sumaryono
Commissioner: Adhy Karyono
Independent Commissioner: Dadang Setiabudi*
President Director: Busrul Iman
Director of Finance, Treasury & Global Services: Edi Masrianto
Director of Micro, Retail, and SME: R. Arief Wicaksono
Director of IT & Digital: Zulhelfi Abidin
Director of Risk Management: Eko Susetyono
Director of Operations: Arif Suhirman
Director of Compliance: Umi Rodiyah

(*) Effective upon passing the Fit and Proper Test by the Financial Services Authority (OJK).

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