Bank Danamon sell-off faces obstacles<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
The government's plans to divest a majority stake in Bank Danamon
\nlook set fair to encounter more turbulence after the House of
\nRepresentatives' banking subcommittee requested a delay on
\nMonday.<\/p>\n
The House budget committee's banking subcommittee pointed to
\nthe current weakness in the market and the absence of a law
\ngoverning the divestment of state assets and the privatization
\nprogram.<\/p>\n
\"We want the divestment of the government's stake in Bank
\nDanamon to be preceded by the enactment of a law on divestment
\nand privatization,\" subcommittee chairman Paskah Suzetta told
\nreporters after a meeting with officials of the Indonesian Bank
\nRestructuring Agency (IBRA), the government agency that holds the
\nBank Danamon stake.<\/p>\n
Paskah argued that without such a law, the divestment program
\nwould lack a strong legal basis and would thus be prone to
\npotential backlashes from various \"stakeholders.\"<\/p>\n
The House budget committee, however, has yet to endorse the
\nrecommendation of the subcommittee.<\/p>\n
IBRA has started the process of selling the Bank Danamon
\nstake, and it had expected that the process will be completed
\nsometime in April.<\/p>\n
The agency controls around 99.4 percent of the shares in the
\npublicly-listed bank, while the remaining shares are held by the
\ninvesting public.<\/p>\n
IBRA plans to sell up to a 20 percent stake in the bank on the
\nstock market first, to be followed later by the sale of a larger
\n51 percent stake to a strategic investor.<\/p>\n
The sale via the stock market is regarded as crucial, not only
\nto test the market but also to obtain a benchmark price for the
\nnext stage of the divestment.<\/p>\n
The sale of the Bank Danamon stake is part of the effort to
\nrestructure the country's still-weak banking industry. The
\nproceeds from the sale are to be used to help finance the 2003
\nstate budget deficit.<\/p>\n
Although the sale of the IBRA assets that were taken over by
\nthe agency from ailing banks and indebted bank owners in the wake
\nof the late 1990s financial crisis, do not require House
\napproval, the government always regards the agreement of the
\nHouse as being crucial to avoid a political backlash against the
\nprivatization program.<\/p>\n
On the other hand, however, seeking the legislature's support
\nhas proved to be time-consuming.<\/p>\n
The Bank Danamon sale should have started in July of last
\nyear. But it was delayed due primarily to political meddling,
\ncoupled with a lack of interest from foreign investors in the
\ncountry's banking assets.<\/p>\n
Elsewhere, in his response IBRA chairman Syafruddin Temenggung
\nsaid that another delay in the program would create uncertainty,
\nwhich would in turn further discourage new investment from coming
\nto the country.<\/p>\n
\"The divestment can be carried out now to give rise to
\npositive sentiment so as to increase the price of Bank Danamon
\nshares,\" he said.<\/p>\n
Syafruddin added that IBRA would promote the bank's divestment
\nthrough a series of meetings with local investors on Wednesday
\nand an overseas road show to Hong Kong and Singapore in the
\nfollowing days.<\/p>\n
IBRA said Bank Danamon's 2003 net profit was forecast to
\nincrease by 46 percent to Rp 1.38 trillion from an estimated Rp
\n948 billion in 2002.<\/p>\n
Actual figures for 2002 are expected in March.<\/p>\n
The bank is expected to boost outstanding lending to Rp 31.80
\ntrillion from Rp 18.20 trillion last year.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bank-danamon-sell-off-faces-obstacles-1447893297",
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