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.