BCA plans stock split to improve liquidity

The Jakarta Post, Jakarta

Publicly listed Bank Central Asia (BCA) plans to increase the number of authorized shares via a stock split and is seeking approval at its upcoming May 6 general shareholders meeting, the bank unveiled on Thursday in a letter to the Jakarta Stock Exchange.

BCA, however, did not provide details of the plan including the ratio of the split.

A stock split is usually taken in order to make shares more affordable to a wider base of investors, as the share price declines in the process.

As of April 13, outstanding BCA shares in the stock market numbered 6.08 billion. Farindo Investment controls a 51.43 percent stake in the bank, public investors control 36.84 percent, the government 6.48 percent and the remainder is held by the Salim family, the bank's founder.

Shares in BCA on the Jakarta Stock Exchange increased by Rp 50, or 1.4 percent to Rp 3,750 following news of the stock split plan.

Another item on the agenda for the shareholders meeting is to seek approval of the bank's 2003 financial report.

BCA, the country's third largest bank in terms of assets, previously reported that its 2003 audited net profit declined by 6 percent to Rp 2.39 trillion (US$281 million) due to a lower interest income.

The lower income was mainly attributed to lower proceeds from government recapitalization (recap) bonds, as the central bank had aggressively cut down its benchmark interest rate.

Of BCA's Rp 37 trillion in recap bonds, 93 percent carry a floating interest rate.

The government recapitalized BCA with bonds in the wake of the 1997-1999 financial crisis.