Bidding price "good and fair," says Niaga bidder

Dadan Wijaksana The Jakarta Post Jakarta

Although refusing to disclose its bidding price, the Malaysia- based financial group, Commerce Holding-Assets Bhd., said the company had made a "good and fair" bid for the government's 51 percent stake in publicly listed Bank Niaga.

"The bid (price) is good and fair," Rozali bin Mohamed Ali, a senior executive at the company, told a press briefing on Tuesday.

Commerce is one of the two qualified bidders for the acquisition of a controlling stake in the mid-sized bank. The other contender is a consortia led by ANZ Banking Group Ltd. The two submitted their final bids late on Monday to the Indonesian Bank Restructuring Agency (IBRA).

Comments from Rojali came amid lingering concerns that the crucial divestment plan might be canceled due to low bids offered by the two bidders.

IBRA, which holds a 97.15 percent stake in Bank Niaga, has hinted it might scrap the strategic sale plan if the offered prices were too low, and was considering other ways of selling, including secondary offering via the stock market to optimize the price.

Talk of possible cancellation halted the bullish run of the rupiah against the U.S. dollar on Tuesday.

The rupiah strengthened slightly to Rp 8,870 from Rp 8,880 at Monday's close.

Whether or not the planned divestment would go ahead as scheduled will be decided in this week's meeting of the powerful Financial Sector Policy Committee (FSPC).

FSPC groups together economic ministers and is in charge of IBRA's sale of assets and debt restructuring program worth more than Rp 1 trillion (US$112 million).

The International Monetary Fund has asked the government not to delay the Bank Niaga sale plan.

State Minister of State Enterprises Laksamana Sukardi did not rule out on Tuesday the possibility that the divestment could be canceled, saying, "If the offered prices were far lower than the market price, it is better to sell it through the (stock) market."

Rojali acknowledged all the cancellation talks but warned of the impact it may have on the country's crucial efforts in restructuring its ailing banking sector.

Improvement in the banking sector, analysts said, should be the main prerequisite for the revival of foreign confidence in the economy.

Following the completion of the sale of BCA, the Bank Niaga sale should provide a further test for the government as to whether it would carry on with its economic reform program.

Niaga's sale comes after IBRA completed the sale of 51 percent of BCA in March, with a consortium led by U.S.-based investment firm Farallon Capital emerging victorious. Asked about what plans his company has on the bank if it wins the bid, Rozali said it would consider lowering the proportion of the recap bonds in the bank's balance sheet and would be more aggressive in expanding its loans.

Currently Niaga holds some Rp 9.7 trillion worth of recap bonds.