Tue, 14 Nov 2000

Bank Mandiri to go public in fourth quarter of 2001

JAKARTA (JP): Coordinating Minister for the Economy Rizal Ramli said the government was currently making preparations to privatize state Bank Mandiri through an initial public offering (IPO) some time in the fourth quarter of next year.

Rizal told a business conference on Monday that the privatization plan would help accelerate the completion of the "consolidation process" at the bank.

"The government is making preparations so that Bank Mandiri can go public in the fourth quarter of next year," Rizal said.

He said that the consolidation process at Bank Mandiri had been relatively slow.

Bank Mandiri was formed last year out of a merger of four state banks -- Bank Ekspor Impor Indonesia (Bank Exim), Bank Bumi Daya (BBD), Bank Dagang Negara (BDN) and Bank Pembangunan Indonesia (Bapindo).

The government injected a total of Rp 178 trillion (US$19.56 billion) worth of bonds to finance the recapitalization of the bank.

Bank Mandiri is now the country's largest bank with total assets of more than Rp 221 trillion as of the end of last year.

The previous Bank Mandiri president, Robby Djohan, said earlier that the bank was ready to go public early next year by selling 25 percent to 30 percent in shares through the IPO in a bid to raise about $1.5 billion in proceeds.

Rizal also said the government had formed a joint team between Bank Indonesia, the Indonesian Bank Restructuring Agency (IBRA) and the Ministry of Finance to decide the country's future banking landscape.

"The objective is how to create a banking system that is consolidated, but not concentrated," he said.

"A consolidated banking system means that smaller banks must merge to create healthier and stronger banks, but there must also be competition, not concentration," he added.

Rizal said the current merger process in the banking sector had not been satisfying.

The government has closed 68 commercial banks since the banking crisis hit the country in the middle of 1997. The government has also nationalized several private banks and helped finance the recapitalization cost of several others. There are currently more than 150 banks operating in the country, including 39 foreign and joint venture banks.

Separately, the president of publicly listed Bank Danamon Arwin Rasyid said on the sidelines of the conference that the bank was considering swapping between Rp 3 trillion and Rp 5 trillion worth of government recapitalization bonds with performing bank loans under the management of IBRA next year.

The government recapitalized domestic banks by injecting bonds instead of fresh money. The government plans to allow banks to exchange part of the bonds with the bank loans under IBRA to help the banks generate more fresh income and lend more money to the real sector.

Arwin, a former IBRA deputy chairman, said that new lending until the end of this year was expected to reach about Rp 2 trillion, compared to Rp 1.2 trillion as of September.

He added that operational profits this year were estimated to reach about Rp 100 billion. (rei)