BCB, Niaga joins hands to tap market

BCB, Niaga joins hands to tap market

Agence France-Presse, Kuala Lumpur

Malaysia's Bumiputra-Commerce Bank (BCB) and its Indonesian unit PT Bank Niaga tied-up on Wednesday to introduce a speedy remittance service for some 600,000 Indonesian workers here.

The 'CashLaju' (FastCash) service will cater to Indonesian workers here as well as small business traders with active cross- border trade in Indonesia, said BCB chief executive Rozali Mohamed Ali.

The service, available at over 270 BCB outlets, allows monies to be paid to beneficiaries through Bank Niaga's 160 branches on the same day and to other Indonesian banks the next day, he said.

For beneficiaries without any banking accounts, the funds can be collected at some 10,000 post offices under PT POS Indonesia between three to 10 days.

Some 2 billion ringgit (US$526 million) were remitted by Indonesian workers here last year, of which BCB has only a 10 percent share of the market, officials said.

They said the new service was also timely in anticipation of more robust intra-regional trade with ongoing market liberalization.

Bank Niaga's executive director Catherine Hadiman said the bank handled remittances worth some Rp 400 billion ($47.51 million) last year mainly from workers in the Middle East, Hong Kong and Taiwan.

Remittances through the bank are expected to double this year to Rp 800 billion, with the Malaysian portion expected to account for 10 percent of the total, she said.

"We were not focused before on Malaysia but with the new service, I expect 50 percent can come from Malaysia next year," she told reporters.

BCB, the second largest bank in Malaysia, holds a 51 percent stake in Bank Niaga, the 10 largest among some 200 commercial banks in Indonesia.

It bought the stake last year from the Indonesian Bank Restructuring Agency (IBRA), which took over Bank Niaga in the late 1990s along with numerous other banks hit by the regional financial crisis.

On merger talks between BCB and Malaysia's fifth largest lender AMMB Holdings, Rozali said negotiations were ongoing and the central bank has given them until Sept.15 to reach a conclusion.

Sources told financial news wire AFX-Asia the two parties were still haggling over pricing but a memorandum of understanding was expected to be signed soon.

Under the pact, AMMB will sell its retail banking operations to BCB's parent, Commerce-Asset Holdings for 4 billion ringgit in cash, a source said.

Malaysian banks are seeking a new round of mergers to stay competitive ahead of market liberalization in 2007.