Bank Indonesia sells half its stake in Ficorinvest Bank

Bank Indonesia sells half its stake in Ficorinvest Bank

JAKARTA (JP): The central bank, Bank Indonesia, plans to divest half of its 71 percent stake in the publicly-listed Ficorinvest Bank by selling its rights shares to other parties.

"It is in line with the central bank's policy to gradually reduce its ownership in banks (formerly non-banking financial institutions) to avoid conflicts of interest," a director of Bank Indonesia, Haryono, said yesterday.

"So, it's not a sudden decision. We just have to be careful in enforcing the plan because Ficorinvest is now a public bank," he said.

"We have considered that the right time to divest our shares is when Ficorinvest issues rights shares later this month," he added.

Ficorinvest's president, Supari Dhirjoprawiro, said that yesterday the shareholders approved a proposal from the management to issue 40 million new shares at Rp 1,900 (81.U.S. cents) each through a limited offering to raise a total fund of Rp 76 billion.

"The rights issue will double the number of Ficorinvest's shares to 80 million. By selling our rights shares to other parties, we will own only 35 percent of Fircorinvest's total shares after the rights issue," Haryono said.

Ficorinvest is currently 71 percent owned by Bank Indonesia, 4 percent by Bina Usaha Indonesia and 25 percent by the investing public.

Haryono declined to mention the potential buyers of Bank Indonesia's rights but he said that the new investors will be selected and approved by the central bank.

"We don't want new investors with bad track records or those who have a mission at odds with Ficorinvest's current mission," Haryono added.

Ficorinvest's credits are mainly in three sectors, including trade (which accounts for 26 percent of the bank's portfolio last year), manufacturing (19.3 percent) and services (12.7 percent).

The way Bank Indonesia plans to divest its shares, however, is questionable because the transaction will bring in new investors who will hold up to 35 percent of Ficorinvest's total shares.

A capital market regulation requires any parties interested to buy 25 percent shares of a public company, or at least 20 percent but with an intention to control the company's management, to follow tender offer procedures.

"It's possible that two different investors will purchase the shares offered with a maximum ownership of 16 percent and 19 percent of the total shares," Haryono contended.

Supari refused to comment on Bank Indonesia's plan.

He only said 70 percent of the rights issue proceeds will be used to finance Ficorinvest's credits and the remaining 30 percent to pay debts.

He said that Ficorinvest's net profits increased by 61 percent to Rp 11.6 billion last year. Total assets rose 37.5 percent to Rp 1.1 trillion as of last December, while total credits grew by 50 percent to Rp 875 billion.

"The profit increase was a result of higher revenues from interest and fees as well as lower operating costs," Supari said. "Our interest revenues last year reached Rp 127.3 billion, a 94.8 percent higher than 1994."

At yesterday's meeting, the shareholders also approved the management's proposal to pay dividends of Rp 125 per share, totaling Rp 5 billion or 43 percent of net profits. (alo)