Tue, 11 Apr 2000

BCA set to offer up to 30 percent of shares in May

JAKARTA (JP): The giant Bank Central Asia (BCA) will offer up to 882.2 million shares or 30 percent of its total equity through an initial public offering (IPO) on May 19-23.

The IPO price will be set between Rp 1,350 (US$0.17) and Rp 1,750 per share.

"All the shares being offered are owned by the Indonesian Bank Restructuring Agency (IBRA)," said BCA president Djohan Emir Setijoso.

IBRA owns 92.8 percent of BCA after the government injected a massive liquidity support in 1998 to bail out the bank which was suffering from a run on deposits and a worsening economic situation. The remaining 7.2 percent is held by the founding shareholders, the Salim family.

The BCA IPO will be part of IBRA's divestment program to raise some Rp 18.9 trillion between April-December to help finance the 2000 state budget.

A domestic road show is scheduled for April 10-13, and an international road show on April 26-May 9 covering Singapore, Hong Kong, New York, London, and Edinburgh.

The exact IPO price would be decided on May 9 and listings on the Jakarta Stock Exchange and the Surabaya Stock Exchange will be made at the end of May.

The lead underwriters of the IPO are PT Bahana Securities and PT Danareksa Sekuritas.

BCA, formed in 1957, was the country's largest private bank. The bank was controlled by the Salim Group, Indonesia's largest conglomerate, and the family of former president Soeharto. Salim now owns 7.2 percent of BCA.

During the social unrest that occurred before and shortly after the fall of Soeharto in May 1998, Bank BCA suffered a massive run on its deposits and some 149 branches were destroyed during mass rioting.

IBRA nationalized the bank on May 28, 1998. Management changes and a recapitalization program were initiated the following year.

"Under the new management, BCA has recorded a significant increase in net profit," Djohan said.

He pointed out that net profit in 1999 was Rp 641.29 billion compared to a loss of Rp 28.40 trillion in 1998.

He added that the bank's capital adequacy ratio (CAR) level soared from 16.54 percent in May 1999 to 41.95 percent at the end of last year.

Djohan said that total assets at year end 1999 were Rp 96.45 trillion, one of the largest in the industry.

He said that total deposits last year were around Rp 87 trillion, also one of the largest in the industry.

BCA has 795 branches at home and two overseas and operates 1,858 automatic teller machines (ATMs).

Djohan said that the bank planned to increase the number of ATMs by around 200 units this year.

Djohan said that all of the IPO proceeds would go to IBRA to help finance the state budget.

He said that BCA had no immediate plans to offer new shares because the bank's current capital base of more than Rp 5 trillion was "quite strong" to support its lending program.

But Djohan added that once the country's economy recovered from its economic crisis, the bank would consider offering a rights issue.

Djohan said that BCA had resumed lending in August 1999 to retail customers and in January to corporate customer.

He said that the bank's total lending this year was projected to reach Rp 7.8 trillion.

He said that the bank's corporate credit policy would be directed to various economic sectors, but lending on each sector would be limited to 20 percent of total lending portfolio.

He added that lending to the property sector would be limited to 10 percent.

He said that the bank would develop its consumer banking and retail lending operation with Bank of America, while PriceWaterhouseCoopers would help design its risk management system.

Djohan and three other directors at Bank BCA are former bankers at state banks. This has raised concern that their management style would be bureaucratic, thus hampering the bank's future development.

But Djohan dismissed the concerns. He pointed out that he himself had long experience running a joint venture bank and the overseas branch of state Bank BRI. He added that his two other colleagues also had banking experience overseas.

"Also, we have not changed middle management. We think that they're the best people in the industry." Djohan said.

Bank BCA plans to launch internet banking in the third quarter of this year, expecting to lure some 5 percent of its eight million individual customers. The service will be offered to corporate customers in the first quarter of 2001.(rei)