Synergy for Bank Danamon<\/p>\n
Another confidence-building deal is about to be wrapped up in
\nthe banking industry.<\/p>\n
The Indonesian Bank Restructuring Agency (IBRA) selected on
\nMonday afternoon Asia Finance Indonesia Pte. Ltd., the consortium
\nof Singapore government-owned Temasek Holdings and Deutsche Bank
\nof Germany, as the preferred bidder for a 51 percent stake in
\nBank Danamon.<\/p>\n
The foreign consortia predictably edged out the other two
\nfinal bidders -- Bhakti Capital-Bank Mega and Bank Artha Graha
\nconsortia. These two national bidders are indeed too tiny
\ncompared to the Singapore-German group on account of all basic
\ncriterion imposed by IBRA.<\/p>\n
Bhakti Capital offered only Rp 1,025 (11.5 U.S. cents) a
\nshare, much lower than the Rp 1,160 floor price set by IBRA,
\nwhile Artha Graha withdrew from the bid at the eleventh hour.
\nAsia Finance bid Rp 1,202 or 1.27 times Bank Danamon book value.<\/p>\n
Even if the national bidders offered much higher prices, they
\ncould still not match the Temasek-Deutsche Bank consortium in
\nterms of reputation or credibility that is most vital to a bank
\nas an institution of trust with high fiduciary responsibility.<\/p>\n
Besides generating more than Rp 3 trillion to the state
\nbudget, the deal will provide a new building block for the
\nrestructuring of national banks and will make competition within
\nthe banking industry much healthier.<\/p>\n
Bank Danamon, the country's 5th largest bank with about Rp 47
\ntrillion ($5.2 billion) in total assets, is the third
\nnationalized bank to be sold to new investors after Bank Central
\nAsia and Bank Niaga.<\/p>\n
IBRA indeed is now racing against time in completing the
\noverall restructuring the country's largest banks that it now
\ncontrols under the government-funded massive recapitalization
\nprogram in 1999 and 2000.<\/p>\n
Unless these banks are released to private investors who are
\nable to bring in fresh money, better management and, most
\nimportant, higher credibility, these banks could be doomed to
\nfailure when the government begins phasing out its blanket
\nguarantee on bank deposits and claims later this year.<\/p>\n
That only five consortia, including two foreign ones, took
\npart in the preliminary bidding for Bank Danamon and only two of
\nthem made the final bids further shows how uncomfortable foreign
\ninvestors are about the investment climate in Indonesia.<\/p>\n
The small number of bidders, however, did not decrease the
\nquality of the final winner. In fact, the Temasek-Deutsche Bank
\nwill bring in strong synergy to Bank Danamon in all areas most
\nvital to a sound bank such as capital strength, market
\nreputation, human resources and networking.<\/p>\n
This is the right kind of synergy Bank Danamon badly needs to
\nbolster its market competitiveness in view of the fragile
\neconomic condition and the fierce competition within the banking
\nindustry as most domestic and foreign banks now compete in the
\nretail market.<\/p>\n
It is therefore misguided to assess the strategic sale of the
\nbank simply from its price. Yet more important is the credibility
\nand better management that will be brought in by the new majority
\nowners. A strategic investor with as good reputation as Asia
\nFinance will jump start Bank Danamon's operational restructuring.<\/p>\n
A stronger Bank Danamon not only will increase its share value
\nbut also will benefit the banking industry and the economy as a
\nwhole. That too will enable the government to recoup a greater
\nportion of its more than Rp 20 trillion investment in the bank as
\nit can later sell its remaining 48 percent stake at a much higher
\nvalue.<\/p>\n
This is the most fundamental thing politicians, who like to
\nwhip up narrow-minded nationalistic sentiments, should be fully
\naware of.<\/p>\n
A successful deal for Bank Danamon will also create a virtuous
\ncircle within the restructuring of the banking industry and a
\nconducive condition for the forthcoming government divestment of
\nnationalized Bank Lippo and Bank International Indonesia and
\nstate Bank Mandiri within the next six months.<\/p>\n
The deal should also be welcomed as one of the most
\ntransparent and accountable transactions. Different from previous
\ndivestments, the whole process of Bank Danamon's strategic sale
\nwas supervised simultaneously by an independent review team, a
\nfinancial adviser and IBRA's internal audit committee.<\/p>\n
However, given the legal and political harassment faced by
\nmany foreign investors that had acquired Indonesian assets --
\nsuch as the ones undergone by Temasek's acquisition of PT Indosat
\nlate last year -- the government should not take the Bank Danamon
\ndeal for granted.<\/p>\n
Even though the House of Representatives had approved the
\ndivestment of Bank Danamon last year, the government should
\nimmediately start an effective communications program to
\nenlighten all Bank Danamon stakeholders of the great benefits the
\nnew investors will generate for the bank.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/synergy-for-bank-danamon-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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