Analysts slam strategy in sale of BCA shares

Analysts slam strategy in sale of BCA shares

JAKARTA (JP): As controversy over the sales of shares of
publicly-listed Bank Central Asia (BCA) heats up, analysts
demanded that the Indonesian Bank Restructuring Agency (IBRA)
conduct the sale of the bank in a transparent manner.

An economist at the University of Gadjah Mada (UGM), Sri
Adiningsih, said that IBRA should disclose the identity of
bidders to maintain transparency.

"IBRA must disclose the bidders to ensure that BCA doesn't
fall into the hands of the wrong people," said Adiningsih, who is
also a member of IBRA's ombudsman team.

The government, via IBRA, plans to sell a 30 percent stake in
BCA through private placement this month.

There has been concern, however, that the Salim Group, the
founder and former owner of BCA, could reenter the bank through
purchasing shares by proxy.

The government has ruled that the Salim Group, which is
responsible for sending BCA into trouble in the wake of the 1997
financial crisis, must not reenter the bank.

But IBRA Chairman I Putu Gede Ary Suta said that the agency
could not disclose the names of the bidders because of an
agreement on confidentiality.

Speaking to the Jakarta Post by telephone, Ary Suta warned
bidders of the legal consequences if they joined hands with the
Salim Group in purchasing BCA shares.

He declined to disclose more details about the planned sale,
saying that he had to wait until President Megawati Soekarnoputri
announced her Cabinet team.

BCA was nationalized by the Indonesian Bank Restructuring
Agency (IBRA), a unit under the finance ministry, in 1999 after
the government had to inject some Rp 48 trillion (US$5 billion)
in liquidity support amid massive bank runs at the time. The
Salim Group had used BCA funds, violating the legal lending limit
requirement, to finance the conglomerate's various businesses
that ran into trouble in the wake of the economic crisis. The
government had to use massive amounts of taxpayers money to bail
out the bank.

The sale of BCA shares is part of an effort to recoup the cost
of the bailout.

In May last year, the government sold around 22.5 percent of
its ownership through an initial public offering (IPO).

The government agreed with the International Monetary Fund
(IMF) to sell another 40 percent stake in BCA.

The government initially planned to sell the 40 percent stake
via private placement to obtain optimum proceeds, but the House
of Representatives demanded a double-track mechanism via a
combination of secondary offerings and private placement to help
maintain transparency amid fears of a Salim Group come back.

IBRA then sold the first 10 percent through a secondary public
offering that ran from July 4 to July 6, 2001.

But some analysts lambasted the double-track strategy, saying
it had shut out the highest possible bids for the bank.

Economist Pande Raja Silalahi said that if IBRA sold the
entire 40 percent stake through private placement, strategic
investors would be willing to pay a premium price.

He said that a 30 percent stake was less attractive to
strategic investors.

IBRA was supposed to announce the winning bidder for the BCA
shares late June, but skipped it saying it wanted to pursue a
better deal. As yet, it remains unclear who the bidders are.

Meanwhile, with no clear date on when the government can wrap
up the BCA sale, controversy emerged over the bank's trading of
shares.

Analysts suspect insider trading and a manipulation of market
prices behind trading in BCA shares shortly before the bank
underwent its secondary public offering.

The suspicions are being investigated by the Capital Market
Supervisory Agency (Bapepam).(rei/bkm)