Bank Bali seeking to sell majority stake to foreign bank

Bank Bali seeking to sell majority stake to foreign bank

SINGAPORE (Dow Jones): Bank Bali, widely seen as one of a handful of big Indonesian banks that remains solid, is seeking to sell majority ownership to a foreign bank, its chief executive said.

Rudy Ramli, president of the listed bank, told Dow Jones Newswires during a recent visit to Singapore that the bank hopes to find a foreign partner by the end of the year. The selected foreign bank would get majority ownership by taking up newly issued shares that would recapitalize Bank Bali, he said.

Rudy said that 12 foreign banks have responded to invitations Bank Bali made to prospective buyers after hiring J.P. Morgan Securities Asia as its private placement advisor. The bank president declined to name any of the interested parties or speculate on who might emerge as the buyer.

A Singapore banker, however, said she believes Dutch bank ABN- AMRO, which has bought into Thailand's Bank of Asia, might be a prime candidate for buying into Bank Bali.

According to Rudy, whose family is a shareholder in the bank, a foreign bank would be welcome to buy "about 60 percent or maybe even 80 percent" of Bank Bali.

Bank Bali is one of the five biggest Indonesian banks that haven't been taken over by the government's Indonesian Bank Restructuring Agency this year. Privately owned banks under IBRA, as the agency is known, include PT Bank Central Asia, controlled by the Salim Group.

Rudy said Bank Bali, which currently has 285 branches and assets of about Rp 20 trillion (about US$1.8 billion), has seen a sharp rise in deposits in recent months. He said deposits at the beginning of September totaled Rp 10.3 trillion, compared with less than half that at the beginning of the year.

For the first six months of this year, Bank Bali reported a net profit of Rp 67.9 billion, compared with Rp 75.9 billion in the same period a year ago. It increased its loan-loss provisions to Rp 802.8 billion from Rp 100.7 billion in the first half of 1997.

Last week, Bank Bali said in a statement that it had asked IBRA if Bank Bali could take over 200 to 300 branches of trouble- ridden banks currently under the agency's supervision. It isn't clear yet if IBRA will approve the request.

While in Singapore, Rudy said the plan to add hundreds of branches to its network "doesn't really depend on getting in a foreign partner." Under the expansion proposals, Bank Bali would simply take over the branches and their staff, and not the loans of those branches. "We would buy physical assets," he said, estimating that the plan could result in Bank Bali taking on more than 2,000 staff laid off by problem-ridden Indonesian banks.

Bankers in Singapore and Jakarta say that even Indonesian banks that have steered safely through the country's deep economic crisis are in need of greatly boosting their capital.

"Banks like Bank Bali have good operations, but all banks are facing big provisions and problems so they have no choice but to recapitalize," said a Singapore banker, who declined to be named.