Bank Niaga to launch rights issue next year
Bank Niaga to launch rights issue next year
The Jakarta Post, Jakarta
The publicly listed Bank Niaga may have to delay its planned
rights issue until the first quarter of next year on fears that
the market may not be able to fully absorb the huge issue under
current conditions.
"The timeframe for the rights issue is flexible. We're still
looking at the situation especially within the context of the
current (political) transition. We're afraid the market may not
be ready," said Bank Niaga president Peter B. Stok as quoted by
detik.com on Monday.
Bank Niaga, which is 52.8 percent controlled by Malaysia's
Commerce-Asset Holdings, plans to raise around Rp 1 trillion
(about US$109 million) to boost capital by offering new shares to
existing investors. The bank initially planned to launch the
rights issue in August or November of this year.
The government owns some 20 percent shares in the country's
ninth largest bank by assets, while the investing public holds
the remainder.
Peter said that the delay would not affect the bank's capital
condition as its capital adequacy ratio (CAR) until the end of
this year was estimated at around 11 percent, way above the
central bank's minimum requirement of 8 percent.
Analysts have said, however, that the bank needs to increase
capital in order to boost lending.
The government via the Ministry of Finance's asset management
company PT PPA has previously expressed concern that the rights
issue program would dilute its ownership in the bank as the
government would not buy the new shares due to the lack of funds.
Reports said that PPA has demanded Bank Niaga provide
compensation for the expected dilution of government ownership.
Peter said that the bank's management had yet to discuss this
problem with PPA, which has been busy carrying out the divestment
of government shares in Bank Permata. The sale is expected to be
completed later this year.
Bank Niaga expects to reap some Rp 500 billion in profit this
year, up from Rp 467.3 billion last year. The bank expects to
provide between Rp 4.5 trillion to Rp 5 trillion in new lending
this year, and plans to increase lending by 30 percent in 2005.