BRI delays this year's acquisition plans

Rendi A. Witular, The Jakarta Post, Jakarta

State-controlled Bank Rakyat Indonesia (BRI) is likely to delay its plan to make a number of acquisitions this year, including increasing its share in multifinancing unit PT UFJ-BRI Finance to a majority stake.

BRI president director Sofyan Basir told The Jakarta Post on Wednesday that the bank would probably be able to execute the plans some time next year, as it would still need more time to conduct a feasibility study on UFJ-BRI Finance before it could obtain shareholder approval.

"We are unlikely to go ahead with any acquisitions this year, including the plan to control UFJ-BRI Finance. We feel more comfortable with making acquisitions next year, because we are still focusing on several feasibility studies," said Sofyan.

As reported previously, BRI vice president director I Wayan Alit Antara said the bank was planning to increase its share in the UFJ-BRI Finance this year to a majority stake.

BRI currently has a 45 percent stake in the company, with the remaining shares controlled by Japan's UFJ Bank.

By controlling UFJ-BRI Finance, BRI expects to solidify its strength in serving financing schemes for small and medium enterprises throughout the country.

The government owns an 80 percent stake in BRI, with the public holding the remaining.

BRI is the nation's fourth largest lender by assets and has the largest network of branches in the country.

Aside from UFJ-BRI Finance, the bank is also eyeing other financial companies in the field of leasing, although the plan might have also to be postponed to next year.

In a recent report to House of Representatives Commission VI for state enterprises, trade and industry, BRI said it had allocated some Rp 940 billion (about US$100 million) this year for its acquisition plans.

BRI has targeted some Rp 15.89 trillion in new loans this year, an increase of 26.04 percent from last year. About 80 percent of the new loans will be provided to small and medium enterprises.

Between this year and 2007, the bank's lending exposure is projected to grow by between 18 percent and 20 percent.