BCA divestment plan on schedule: IBRA

BCA divestment plan on schedule: IBRA

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
dismissed speculation of a delay in the divestment of its
ownership in the giant, publicly listed PT Bank Central Asia
(BCA), saying the divestment process was proceeding according to
schedule.

IBRA deputy chairwoman Felia Salim said, however, on Friday
that the evaluation of the submitted bid would take longer, as
the agency wanted to ensure a profitable sale.

"IBRA decided to take more time for the evaluation of all
submitted bids and to negotiate the terms and conditions to be
imposed on the selected investor," Felia said in a statement.

BCA's divestment is slated for late June or early July, with
IBRA supposed to announce the bidders by the end of this week.

The government plans to divest 40 percent of its stake in BCA,
with up to 30 percent being sold through private placement, and
the rest through a secondary public offering.

IBRA said previously that around 10 local and institutional
investors had submitted bids for BCA, but later this number
shrank to five.

Yet, speculation has arise that BCA's sale may be delayed
because the government deemed the bids which have been submitted
so far as being too low.

Finance minister Rizal Ramli has said he wanted IBRA to ensure
that the divestment of BCA would not end in a fire sale.

BCA, which was once the country's largest private bank, is
among the gems of IBRA's assets.

BCA's extensive network of branches and banking infrastructure
has carved out for it a strong position in the retail banking
market.

The government nationalized IBRA following the devastating
1997 regional financial crisis.

The government now expects investors to pay a premium price
for BCA's shares. But analysts said investors would agree to pay
a higher price only if the government granted them a majority
stake in the bank.

Felia said IBRA was as yet unable to disclose further details
as negotiations over the submitted bids were still underway.

Because of the bank's strategic value, IBRA had decided to
extend the time limit for evaluating the bids, she continued.

This consideration, however, could lead the government to
delay BCA's divestment for a second time.

BCA, along with Bank Niaga, was slated for divestment last
year. Back then, legislators blocked the sales on fear that they
were untimely given the sluggish market conditions then
prevailing.

The move prompted the International Monetary Fund (IMF) to
withhold the disbursement of a US$400 million loan tranche to
Indonesia.

The two banks' divestment forms part of the economic reform
targets the government must meet in order to obtain further
financial aid from the IMF.

Five billion U.S. dollars have been allocated to Indonesia
under the IMF's three-year economic recovery program. But since
last year's delay of the loan tranche, the IMF has yet to resume
its financial assistance to the country.

Risking a second delay in the BCA divestiture could lead to a
further deterioration in Indonesia's relations with the IMF.

According to legislator Theo Toemion, the IMF has demanded
that the government sell 39 percent of BCA's stake under private
placement, with only 1 percent to be offered to the public.

BCA held its initial public offering last year, at a price of
Rp 1,400 (about 12 U.S. cents) per share. But persistent selling
pressure in the stock market has dragged its share price down to
Rp 1,000. (bkm)