BCA plans to provide new loans to 'healthy sectors'
BCA plans to provide new loans to 'healthy sectors'
SINGAPORE (JP): Giant Bank Central Asia (BCA) expects to
provide about Rp 4 trillion (US$516.13 million) in new lending
this year which will be primarily loaned to consumer goods firms
and export-related businesses, according to the bank's president
Djohan Emir Setijoso.
Djohan said that in the consumer goods sector, the bank was
particularly interested in food, pharmaceutical and cigarette
businesses.
"They're doing quite well because consumer demand has
returned. We'll concentrate our loans at the moment on the three
businesses," he told a business luncheon held on Friday as part
of the bank's overseas road show.
BCA plans to offer between 15 percent and 30 percent shares
through an initial public offering (IPO) on May 19 through May
23. This will be a landmark IPO for the country.
Djohan said that some pharmaceutical companies had claimed
their sales had already reached precrisis levels.
He said that in the export-related sector, the bank was
interested in doing business with plantation firms and textile
companies.
"We find the export market also very encouraging," he said.
He said that local textile companies that had survived the
country's economic crisis were now moving toward full production
capacity.
"They need money to finance additional machinery," he said.
"The sectors we're avoiding at the moment include property,"
he said, pointing out that the local property sector was still in
the doldrums.
Djohan said the Rp 4 trillion new lending did not include the
loan portfolio to be acquired from the Indonesian Bank
Restructuring Agency (IBRA).
"New lending this year will be around Rp 4 trillion ... This
doesn't include the IBRA loan," he said.
Djohan also said the loan expansion would be financed
internally.
He pointed out that the bank had some Rp 20 trillion in
secondary reserves mostly invested in short-term Bank Indonesia
SBI promissory notes, and about $1 billion in interbank
placements.
"Over the next one to two years, we'll have the liquidity to
grow in lending," he said, in response to questions regarding the
bank's ability to finance lending as the bank's books show a huge
amount of relatively illiquid government bank recapitalization
bonds.
"The interbank placements that we have are all postcrisis
interbank placements with banks that have survived the crisis,"
Djohan said.
Many Indonesian banks previously suffered liquidity problems
as their interbank loans had been placed in banks closed down by
the government.
Djohan also said that BCA had signed a technical assistance
agreement with the Bank of America to develop its consumer
lending operation.
He added that the bank had recruited a credit risk management
expert from Chase Manhattan Bank.
"Credit risk management is something new to us," he said.
BCA is 92.8 percent controlled by IBRA, a unit of the finance
ministry. The government nationalized the country's largest
private bank in May 1998 after it was hit by a massive run amid
plunging confidence in the banking industry.
The remaining 7.2 percent stake is owned by the Salim Group,
the bank's former owner.
IBRA will launch the IPO in a bid to raise cash to help
finance the 2000 state budget.
After a road show in Hong Kong and Singapore, the next stop
this week will be in the U.S. which includes New York, Boston and
Washington D.C. The last round will cover Europe including
London, Edinburgh, Amsterdam and Frankfurt and will be completed
on May 9.
IBRA and the four lead underwriters of the IPO which include
Merril Lynch, Lehman Brothers, PT Danareksa Securities and PT
Bahana Securities will decide the final IPO price. The indicative
IPO price is set at between Rp 1,350 and Rp 1,750 per share.
After nearly two years under the supervision of IBRA, BCA has
become healthier, with a Rp 641.29 billion net profit in 1999
compared to a loss of Rp 28.40 trillion in 1998.
Djohan said that net profit in the first quarter of 2000 was
Rp 370 billion.
"Our balance sheet is clean and promising," Djohan said. (rei)