Commerce eyes growth, not Bank Niaga job cuts<\/p>\n
The Jakarta Post
\nJakarta<\/p>\n
Entering Indonesia's banking sector as it languishes in the
\ndoldrums, Malaysia-based Commerce Asset Holding Berhad (CAHB)
\nsaid its focus was on expanding the business of newly acquired
\nBank Niaga, while promising no lay-offs in the country's ninth
\nlargest bank.<\/p>\n
CAHB said on Monday the acquisition would allow it to capture
\na share of Bank Niaga's consumer finance and commercial business.<\/p>\n
\"We are delighted to be working with Bank Niaga, which is one
\nof Indonesia's best managed and reliable banks with a recognized
\nbrand and a growing commercial and retail franchise,\" said CAHB
\ndirector Rozali bin Mohammed Ali in a press statement.<\/p>\n
\"This deal ensures Bank Niaga customers that Bank Niaga is run
\nby a strategic investor focused on expanding the products and
\nservices to meet their increasingly specialized needs.\"<\/p>\n
\"In terms of employees, all Bank Niaga employees can be
\nconfident that CAHB is interested in growth, not reduction,\" he
\nadded.<\/p>\n
The Indonesian Bank Restructuring Agency (IBRA) sold a 51
\npercent stake in Bank Niaga to CAHB for Rp 1.05 trillion (about
\nUS$114 million) last Friday.<\/p>\n
Following the sale, IBRA's stake in Bank Niaga fell to 46
\npercent from 97 percent. Proceeds from the bank sale will be used
\nto help cover the state budget deficit this year.<\/p>\n
Bank Niaga marks the second sale to a foreign investor of a
\nbank taken over by IBRA, following the sale of a 51 percent stake
\nin Bank Central Asia (BCA) to an American investment firm last
\nMarch.<\/p>\n
Both deals followed lengthy public debates over the benefit of
\nselling nationalized banks after the government, through IBRA,
\nbailed out scores of banks with billions of dollar in state bonds
\nduring the 1997 economic crisis. The government earned some Rp 5
\ntrillion from selling BCA but must still pay the bank around Rp 7
\ntrillion a year because of the bonds.<\/p>\n
CAHB gave assurances that it was a long term investor
\ncommitted to making Bank Niaga a success -- an argument the
\ngovernment used to win over skeptical legislators to secure their
\napproval for the sale.<\/p>\n
\"We believe that CAHB and Bank Niaga have a range of
\ncomplementary skills, and that a combination of Bank Niaga's
\nmanagement expertise and CAHB's know-how will benefit all our
\nstakeholders,\" Rozali said.<\/p>\n
CAHB is the financial group that owns Bumiputra-Commerce Bank
\nBerhad, Malaysia's second largest bank with 3.5 million
\ncustomers.<\/p>\n
Listed on the Kuala Lumpur Stock Exchange since 1987, CAHB is
\nengaged in various financial services like commercial banking,
\nmerchant banking, stockbroking, venture capital, and life
\ninsurance.<\/p>\n
The group was founded in 1924 as a family bank under the name
\nBian Chian Bank Limited, and has since became a financial group
\nwith interests in over 20 companies.<\/p>\n
It said its entrance into the Indonesian market was part of a
\nwider strategy to invest for \"long-term growth in ASEAN markets\".<\/p>\n
The sale of Bank Niaga, however, comes against the backdrop of
\nrecurrent protests over the sale of state assets to foreigners.<\/p>\n
Like BCA, Bank Niaga's sale faced opposition from legislators
\nwho questioned the gains of selling the bank after its costly
\nbail-out.<\/p>\n
Bank Negara Indonesia (BNI) banking analyst Ryan Kiryanto said
\nold issues like these could hamper IBRA's future bank sales.<\/p>\n
\"Such problems should be dealt with first before launching
\nanother bank sale. The government and legislators must settle
\ntheir differences internally,\" he said.<\/p>\n
Banking analyst Mirza Adityaswara agreed but added that both
\nsides should have learnt by now how to proceed with bank sales
\nwithout stumbling over the same old obstacles.<\/p>\n
The government does not need legislative approval for state
\nasset sales but has preferred to seek it so as to avoid a
\npolitical backlash.<\/p>\n
IBRA chairman Syafruddin Temengung has said that the agency
\nhad yet to secure approval for selling its third bank, Bank
\nDanamon, even though three letters had been sent asking for
\nsupport.<\/p>",
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