Bank Mandiri to market mutual funds

Zakki Hakim, The Jakarta Post, Jakarta

Securities firm PT Mandiri Sekuritas, a subsidiary of the giant state Bank Mandiri, plans to launch a total of Rp 20 trillion (about US$2.3 billion) worth of mutual funds, a senior bank official has said.

Bank Mandiri senior executive vice president of treasury and international operations Clemento Escano said that the bank would become the marketing agent for the mutual fund.

He told The Jakarta Post on Tuesday that the bank targeted about Rp 5 trillion worth of mutual funds to be marketed by the end of this year.

Most of the funds will be invested in bank recapitalization bonds.

The domestic mutual funds industry has been booming since last year as a growing number of banks, seeking an alternative source of fee-based income, offer depositors an investment option which could enjoy a tax break on interest earned from investing in bank recapitalization bonds.

But the Bank Mandiri official said that the bank would not guarantee the yield of the mutual funds in compliance with Bank Indonesia regulations as that would create a risk for the bank.

Meanwhile, Mandiri Sekuritas vice president Denny R. Thaher said that the mutual funds would be marketed mainly to Bank Mandiri's corporate clients.

The planned mutual funds will be the largest on the market so far. Previously, Bank Panin and Bank Danamon had each brought in some Rp 10 trillion from selling mutual funds within a 10 to 17- month period.

According to data from the Capital Market Supervisory Agency (Bapepam), the size of the mutual fund industry's net assets last year had reached Rp 46.62 trillion, or nearly a 500 percent jump from the level in 2001.