BCA drops Permata plan, Danamon to seek approval
Rendi A. Witular, Jakarta
Publicly listed Bank Central Asia (BCA), the country's second largest bank in terms of assets, has canceled plans to join bidding for a controlling stake in Bank Permata, a senior official said.
BCA finance director Jahja Setiaatmadja said the bank's board of commissioners and a number of shareholders had rejected the plan because the bank could not play a deciding role in the planned financial consortium set up for the Permata bid.
"The board of commissioners rejected our plan because they considered it unfeasible and not strategic, since our part in the consortium would be small," Jahja told The Jakarta Post in a telephone interview on Tuesday.
"We needed to play a greater role in the consortium in order to have full control over Permata's operations. But as you known, central bank regulations limit us from doing that," he said.
BCA, which is controlled by U.S-based Farralon Capital and local cigarette producer PT Djarum, needed to form a consortium to be able to participate in the Permata tender, since banking regulations limit the size of a bank's investment in a single entity to no more than 10 percent of its net equity.
As of the first quarter of this year, BCA had an equity of Rp 13.46 trillion (US$1.5 billion) and assets valued at Rp 136.2 trillion.
Shares of BCA ended unchanged at Rp 1,875 on the Jakarta Stock Exchange (JSX) on Tuesday.
The government, which has a 97.17 percent stake in publicly listed Permata, plans to sell 71 percent of its stake later this year to raise cash to help finance the state budget deficit.
The government, which is expected to reap around Rp 3 trillion from the Permata sale, has extended its schedule to announce the winner of the bid to December from November, due to the elections.
Elsewhere, publicly listed Bank Danamon, the country's fifth largest bank in terms of assets, said that it was still seeking approval from its board of commissioners in order to participate in the Permata tender.
Danamon president director Francis Andrew Rozario said the bank was in the final stage of evaluating the advantages and disadvantages of acquiring Permata.
"We haven't really approached anyone yet to form a consortium for the bid, since we are still finalizing the plan. We expect approval from the commissioners in the middle of August," said Rozario before a press conference on Tuesday.
Rozario said that Danamon would only contribute a maximum of 25 percent to the consortium due to the limitation stated in banking regulations.
Asia Financial Indonesia Pte. Ltd (AFI), a consortium of Singapore's Temasek Holdings Pte. Ltd. and Germany's Deutsche Bank, is the controller of Danamon.
Danamon shares ended lower by Rp 50 to Rp 3,325 on the JSX on Tuesday.