Company profile RESULT AND FINDING

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CHAPTER 1V RESULT AND FINDING

A. Company profile

1. Bank Muamalat Indonesia PT Bank Muamalat Indonesia Tbk was established in 1991, endorsed by the Indonesian Council of Ulemas MUI and the Government of Indonesia, and commenced operations in May 1992. Supported by the Indonesian Association of Moslem Intellectuals ICMI and a group of Moslem entrepreneurs, the founding of Bank Muamalat also won the support of the general public, evidenced by a Rp 84 billion pledge for the purchase of the Bank’s shares on the date when the Articles of Association was signed. Thereafter, in a special meeting commemorating the founding at the Presidential Palace in Bogor, West Java, additional pledges from communities in West Java were raised to reach a total of Rp 106 billion. On October 27, 1994, barely two years from its founding, Bank Muamalat received its license to operate as a Foreign Exchange Bank. This recognition strengthened the Bank’s position as the first and leading sharia’ah Islamic bank in Indonesia with a growing array of products and services. In the late 90s, Indonesia was hit by a financial crisis which devastated most of the national economies in the Southeast Asia region. The national banking sector collapsed under the burden of corporate debt 58 overhang, which also impacted Bank Muamalat. In 1998, our Non- Performing Financing NPF ratio exceeded 60. The Bank endured a loss of Rp 105 billion, which brought our equity to its lowest level ever of Rp 39.3 billion, less than a third of our original paid up capital. In an effort to strengthen its capital base, Bank Muamalat solicited for a potential investor, which was responded positively by the Islamic Development Bank IDB based in Jeddah, Saudi Arabia. In the Annual General Meeting of Shareholders of Bank Muamalat on June 21, 1999, IDB offi cially became one of the shareholder of BMI. 2. Bank Syariah Mandiri The enforcement of the Law No. 101998 on Amendment to the Laws No. 7 of the year 1992 on Banking in November 1998 has created favorable opportunity for the growth of shari’ah banks in Indonesia. The Law provides banks with opportunities to operate in single shari’ah system or in dual banking system by opening a shari’ah branch office. PT Bank Susila Bakti BSB,owned jointly by the Employee Welfare Foundation YKP of PT Bank Dagang Negara and PT Mahkota Prestasi struggled to survive from the 1997-1999 crisis by exploring many options including merger and finally determined to convert the system from the conventional to the shari’ah bank with capital injection from the owners. Subsequent to the merger of four state banks Bank Dagang Negara, Bank Bumi Daya, Bank Exim and Bapindo into PT Bank Mandiri Persero on July 31, 1999, the plan for conversion of BSB 59 Bank Susila Bakti into a Shari’ah Bank under the name of Bank Syariah Sakinah Mandiri was taken over by PT Bank Mandiri Persero. As the new owner, Bank Mandiri has shown full supports and resumes the plan for conversion of PT. Bank Susila Bakti into shari’ah bank, in line with the expectation of Bank Mandiri to set up a Shari’ah unit. The initial step was amending the Statutory as well as renaming PT. Bank Susila Bakti into PT. Bank Syariah Sakinah as legalized with the Notarial Act of Mrs. Machrani M.S. SH., Number 29 dated the 19th of May, 1999. Again, the name, was changed into PT. Bank Syariah Mandiri as contained in the Notarial Act of Sutjipto, SH., Number 23 dated the 8th of September, 1999. On the 25th of October, 1999, the Governor of Bank Indonesia issued a Decree Number 124KEP.BI1999 to ratify the change in Business activities of Bank BSB into the bank which operates on the Shari’ah principles. Subsequently, with the issuance of the Decree of the Senior Deputy Governor of Bank Indonesia Number 11KEP.DGS1999, the name was changed into PT. Bank Syariah Mandiri as a subsidiary of PT. Bank Mandiri Persero. Monday the 25th of Rajab, 1420 H or the 1st of November, 1999 marks the first day of Bank Syariah Mandiri‘s operation. The birth of Bank Syariah Mandiri represents a fruit of synergy developed jointly by the early founders of Bank Syariah Mandiri in Bank Susila Bakti and the management of Bank Mandiri whose promotes the important existence of shari’ah bank within Bank Mandiri. 60

B. Result and Finding