Analyst: BCA share must top Rp 1,7000

Dadan Wijaksana, The Jakarta Post, Jakarta

Getting the most credible investor for Bank Central Asia (BCA) should indeed become the government's priority, but quality should not necessarily preclude economic targets, according to a banking analyst.

Mirza Adityaswara said on Thursday that the government should be able to sell its 51 percent stake in the publicly-listed BCA, the country's largest retail bank, at more than the current price of around Rp 1,700 per share.

He said that the price level reflected an 11 percent price-to- deposit ratio.

Speaking on the sidelines of a media gathering held by Castle Asia, he said that, in comparison, foreign investors acquired banks in Thailand in 1998 at a higher 15 percent to 20 percent price-to-deposit ratio.

The comment came as nine bidders are preparing to submit their final bids for the BCA stake on Feb. 28.

IBRA, which holds the BCA stake, was earlier lambasted for selling the government stake in Indomobil at a very low price.

Both BCA and Indomobil initially belonged to the Salim Group. While Indomobil was transferred to IBRA as part of assets used to repay debt to the government, BCA was nationalized by the government to bail out the bank in the wake of the devastating financial crisis.

Among of the top bidders vying for the BCA stake include Standard Chartered Bank (Stanchart), and investment funds Newbridge Capital and Farallon Capital.

Sources earlier said that the government preferred Stanchart to purchase BCA because it could make a positive contribution to the country's overall bank recovery program. The two other top investors were perceived to be merely seeking capital gains from the transaction.

But government officials also said that price would also be an important consideration in selecting the new investor for BCA.

The BCA sale process has also been mired with controversy amid suspicion that the Salim Group is trying to repurchase the bank via a nominee.

Meanwhile, businessmen said that the sale of BCA to a reputable international bank would be positive to the country's overall business activity.

Haryono Martono of the Indonesian Chamber of Commerce and Industry (Kadin) said that the country needed a strong bank which could team up with an internationally reputable bank to help reduce the cost of transactions, especially in exports and imports.

Haryono said that currently, local businesspeople had to pay additional fees of around 2 percent to 4 percent of a transaction's value, just to get access to credit.