BNI, Niaga may issue bonds next year

BNI, Niaga may issue bonds next year

Bank Negara Indonesia (BNI) and Bank Niaga, respectively the
country's third and seventh largest banks by assets, plan to
issue subordinated bonds in the first half of 2005 to improve
their capital adequacy ratio (CAR) and long-term funds.

BNI president Sigit Pramono said the bank planned to issue
US$300 million subordinated bonds in the second quarter next
year, after it completed its audited 2004 financial report and
gained approval from the central bank.

"The bond issue plan is likely to be feasible in the second
quarter next year after we obtain the approval needed ... from
Bank Indonesia," said Sigit in a telephone interview on Thursday.

Sigit said the bonds would be allocated not only toward
strengthening the bank's CAR, but also for improving its third-
party fund structure, which are now mostly short-term funds, by
expanding its long-term funds.

The bonds are to have a maturing period of 10 years.

BNI initially planned to issue the bonds this year, along with
the government's plan to sell its 30 percent stake in the bank to
public investors.

However, due to regulatory constraints and unfavorable market
conditions, the BNI management decided to postpone the plan.

Elsewhere, an official with Bank Niaga who was quoted by Dow
Jones Newswires said the bank sought to sell $100 million in
subordinated bonds by the end of February, with a 10-year
maturity period and a call after five years.

The official said the bank was in the process of appointing a
lead manager for the bonds, which are expected to boost Niaga's
CAR to as much as 14 percent. -- JP