Astra, Stanchart to buy Permata

Astra, Stanchart to buy Permata

Rendi A. Witular, Jakarta

Publicly listed PT Astra International, the country's largest
automotive assembler and distributor, announced on Friday that it
had formed a consortium with United Kingdom-based Standard
Chartered Bank (Stanchart) to bid for a controlling stake in Bank
Permata.

The decision marks Astra's come back in the country's banking
industry after its previously owned bank, the now-defunct Bank
Universal, was taken over by the government in 1999 under a
massive recapitalization program.

Universal was later merged with four other banks to form
Permata.

Astra corporate secretary Aminuddin said that the consortium
had filed a letter of interest with asset management firm PT
Perusahaan Pengelola Aset (PPA) as a token of seriousness in
participating in the tender.

"Astra and Standard Chartered will have equal shares in the
consortium. Astra has allocated some funds for the bid from its
internal cash flow," said Aminuddin, who refused to disclose the
exact funds allocated for the bid.

The government, which has a 97.17 percent stake in publicly
listed Permata, plans to sell 71 percent of its stake later this
year to raise cash to help finance the state budget deficit.

The shares are currently under the management of PPA, a new
entity under the auspices of the Ministry of Finance that was set
up to manage assets previously handled by the now-defunct
Indonesian Bank Restructuring Agency (IBRA).

In a joint press statement with Standard Chartered, Astra said
that Permata would remain an independent entity focusing on the
consumer sector and the small and medium enterprises sector if
the consortium won the controlling stake in the bank.

Astra said that Standard Chartered would help Permata improve
its operation and risk management, while Astra would provide the
bank with access to its financial distribution network and
customers.

Standard Chartered, which has tried to acquire Indonesian
banks in the past five years, said that Permata would become the
bank's strategic investment, which was aimed at strengthening its
operations in the country.

"The three institutions will provide a significant
contribution (to the banking industry) and each will complement
each other," said Standard Chartered Indonesia chief executive
officer Stewart Hall in a statement.

The consortium has appointed NM Rothschild & Sons and UBS as
advisors for the bidding.

Astra shares ended higher by Rp 50 to Rp 5,850 on the Jakarta
Stock Exchange on Friday.

Astra used to be active in the banking business via Universal
Bank, before it relinquished its entire stake in the bank to the
government, following the Asian financial crisis that forced most
of the country's banks into insolvency.

At that time, the government had to provide around Rp 4.6
trillion (US$511 million) in recapitalization bonds to bail out
Universal in order for the bank to increase its capital adequacy
ratio (CAR) -- the ratio between capital and risk-weighted assets
-- to a healthier level of 4 percent.

The government later included Universal among the five banks
merged to form Permata in 1999. The remaining four were Bank
Bali, Bank Arthamedia, Bank Prima Express and Bank Patriot.