Govt cancels Bank Niaga's stake sale<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
The Financial Sector Policy Committee (FSPC) decided on Sunday
\nto cancel the sale of the government's 51 percent stake in
\npublicly listed Bank Niaga to strategic investors because of low
\nbidding prices.<\/p>\n
FSPC secretary Lukita Dinarsyah Tuwo said the powerful
\ncommittee had now urged the Indonesian Bank Restructuring Agency
\n(IBRA) to look for other divestment methods that could generate
\nhigher proceeds.<\/p>\n
"As the strategic sales only produced low bidding prices, the
\ncommittee decided to scrap the process and would instead look for
\nother mechanisms to seek optimum recovery rates," Lukita told a
\npress briefing following the FSPC meeting.<\/p>\n
FSPC groups several senior economics ministers and has the
\nfinal say on the country's asset sale program.<\/p>\n
Lukita said the bids accepted by the bidders were only in the
\nrange of Rp 20 (around 0.3 U.S. cent) to Rp 30 per share.<\/p>\n
In comparison, the market price of the shares at the time the
\nfinal bids were made was around Rp 70.<\/p>\n
Only two consortia made it to the final round led by
\nAustralia's ANZ Banking Group and Malaysia's Commerce Asset
\nHolding respectively.<\/p>\n
State Minister of State Enterprises Laksamana Sukardi had
\nearlier told the press that the government was likely to cancel
\nthe strategic sale because of the low bids and would ask IBRA to
\nlook for other selling strategies including via private placement
\nof a secondary offering in the stock market.<\/p>\n
Lukita fell short of explaining those strategies but said IBRA
\nwould be flexible in determining the options, as long as it could
\nproduce better proceeds.<\/p>\n
The government, through IBRA, owns a 97.15 percent stake in
\nthe mid-sized Bank Niaga with the remaining amount held by the
\npublic, which came as a result of the government taking over and
\nrecapitalizing the bank in the late 1990s.<\/p>\n
The government is supposed to complete the sale of Bank
\nNiaga's controlling shares this month as agreed with the
\nInternational Monetary Fund (IMF), which is providing a
\nmultibillion dollar bailout program.<\/p>\n
The divestment will generate cash to help finance the 2002
\nstate budget deficit. IBRA is targeted to raise more than Rp 35
\ntrillion in cash this year.<\/p>\n
With this new development, meeting the June deadline looks
\nvery unlikely.<\/p>\n
The IMF has insisted the government should not delay the sale
\nprogram so the latter could concentrate on selling off more
\nbanks.<\/p>\n
By the end of the year, the fund demands Indonesia sell two
\nother banks beside Niaga, namely Bank Danamon and Bank Lippo.<\/p>\n
Any delay in the asset sale program would not only hamper
\nIBRA's efforts to raise cash this year, but would also hurt
\nsentiment in the rupiah.<\/p>\n
However, as a consequence of the sale cancellation, the
\nhardest task now will be convincing investors that the country is
\nstill committed to its economic reform program.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-cancels-bank-niagas-stake-sale-1447893297",
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