Sorak told to raise bid, or lose BII<\/p>\n
The Jakarta Post
\nJakarta<\/p>\n
The Indonesian Bank Restructuring Agency (IBRA) has named Sorak
\nFinancial Holdings Pte. Ltd., a South Korean-Singapore
\nconsortium, as the preferred bidder for a 51 percent stake in
\npublicly listed Bank Internasional Indonesia (BII).<\/p>\n
The agency, however, demanded the consortium to raise its
\nbidding price or the offer would go to the competing Bank Panin
\nconsortium.<\/p>\n
\"... Sorak has been selected as the preferred bidder. But the
\nagency still wants them to raise the (bidding) price and improve
\nthe sales and purchase agreement,\" IBRA chairman Syafruddin
\nTemenggung told reporters on Tuesday.<\/p>\n
Sorak has until Friday to resubmit its bid.<\/p>\n
The Sorak and Panin consortia were the last two bidders to
\nsubmit their final bids, at prices above the floor price set by
\nIBRA. Another short-listed bidder, the United Overseas Bank of
\nSingapore, had pulled out of the bidding.<\/p>\n
Kookmin Bank of South Korea leads the Sorak consortium, which
\ngroups together Asia Financial Holdings -- a Singapore-based
\nTemasek Holding unit, Malaysia-based ICB Financial Group Holdings
\nand Barclays, a top lender in Britain.<\/p>\n
The Panin consortium consists of local mid-sized Bank Panin,
\nAustria's leading bank Raiffeinsen Zentralbank Osterreich and
\nFleur Enterprises, which is based in the British Virgin Islands.<\/p>\n
Syafruddin said Sorak had actually offered a lower price than
\nthe Panin consortium, but it emerged the victor in the overall
\nevaluation, which includes a review of the business plan and
\nsales and purchasing agreement (SPA).<\/p>\n
IBRA's remarks could cause another confusion in the sale
\nprocess.<\/p>\n
While pricing has been the priority criteria in determining a
\nwinner in the agency's sale programs, its decision in the BII
\nsale might confirm some arguments that it prefers foreign
\ninvestors than domestic investors, even if local investors offer
\na higher price than foreign investors.<\/p>\n
The sales of Bank Niaga and Bank Lippo indicate the crucial
\nfactor the price plays in selecting the winning bidder.<\/p>\n
Before its completion, the Niaga sale had to be canceled a
\nnumber of times due to the low bidding prices. The most recent
\nexample is the Lippo divestment process, which had to be
\npostponed until next year due to a similar reason.<\/p>\n
BII was previously the financial arm of the powerful Sinar Mas
\nconglomerate, but the bank collapsed during the economic and
\nbanking crisis of 1997-1998, prompting IBRA to recapitalize it
\nalong with other banks. IBRA has held a 93.7 percent stake in the
\nbank since then.<\/p>\n
Today, BII is one of the country's top 10 banks with assets
\nworth more than Rp 36 trillion and a total of 1.1 million
\ncustomers.<\/p>\n
IBRA deputy chairman for bank restructuring I Nyoman Sender
\nechoed Syafruddin: \"If Sorak refuses to improve the price, then
\nwe'll declare the Panin consortium the winner, as long as they
\ncan accept the conditions in our SPA as is.\" He did not
\nelaborate.<\/p>\n
The agency had said on Monday that after the preferred bidder
\nwas selected, Bank Indonesia would conduct a fit and proper test
\non the winning consortium. Existing rulings requires the central
\nbank to conduct the test on those wanting to own a controlling
\nstake in an Indonesian bank.<\/p>\n
IBRA has been selling banks over the last two years in an
\neffort to restructure the banking sector and to generate proceeds
\nto help cover the budget deficit, as well as to revive confidence
\nin the national banking sector.<\/p>\n
IBRA has so far sold three large local banks: Bank Central
\nAsia (BCA), Bank Niaga and Bank Danamon. It also plans to sell
\nthe majority stake in other banks next year, such as Bank
\nPermata, aside from reopening the Lippo sale.<\/p>\n
In addition to raising cash for the state budget, the
\ndivestment of IBRA's stakes in national banks to new, credible
\ninvestors is expected to help strengthen local banks.<\/p>",
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