BCA, Danamon may bid for Permata

Rendi A. Witular, Jakarta

Bank Central Asia (BCA) and Bank Danamon, the country's largest and second largest privately owned banks said they are still studying the possibility of entering the tender process for a controlling stake in Bank Permata.

BCA president Johan Emir Setijoso said that they were still doing a feasibility study to determine whether their investment would be worthwhile.

"If we finally decide to bid for Permata, we may form a financial consortium for it. But we are not going to be the lead in the consortium," said Setijoso after a closed-door meeting with the House of Representatives Commission IX for finance on Tuesday.

Setijoso said that BCA could not lead the consortium because banking regulations limit the size of a bank's investment in a single entity to not more than 10 percent of its net equity.

As of the first quarter of this year, BCA has an equity of Rp 13.46 trillion (US$1.43 billion) and assets valued at Rp 136.2 trillion.

The government plans to sell 71 percent of its total 91.3 percent ownership in publicly listed Permata, which was established two years ago by merging five ailing banks. The proceeds from the sale would be used to help finance the state budget deficit.

Permata is the country's seventh largest bank in terms of assets worth about Rp 29.6 trillion as of the first quarter of this year, and has an equity balance of Rp 1.58 trillion.

The government had previously obtained approval from Commission IX to sell a 20 percent stake in Permata to public investors via a secondary offering, but has not yet obtained approval for the sale of the controlling 51 percent stake.

Several key legislators in the House have called on the government to give local investors a better chance to buy Permata in order to create healthier competition in the country's banking sector.

Meanwhile, Danamon deputy president director Emirsyah Satar said that the bank was also still studying whether it would bid on Permata.

"We are still looking into whether we can work efficiently with Permata," he said after the meeting with Commission IX.

Danamon, which is 62 percent controlled by the Singapore government investment arm Temasek Holdings, has asset of Rp 54.8 trillion and an equity balance of Rp 6.95 trillion as of the first quarter of this year.

Other local banks such as Bank Panin and Bank Artha Graha are reportedly interested in bidding on Permata.