BRI hopes to control UFJ-BRI Finance

BRI hopes to control UFJ-BRI Finance

Rendi A. Witular, The Jakarta Post, Jakarta

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

BRI vice president director I Wayan Alit Antara said the bank
was in the process of obtaining shareholder approval for becoming
the controlling stakeholder in UFJ-BRI Finance, which is jointly
owned with a Japanese bank. He said obtaining a majority stake
would strengthen BRI's leasing businesses.

"We have not decided the exact number of shares we are going
to purchase, or the amount of funds needed. But for sure, we will
become the controlling shareholder of the company soon," said
Wayan after a hearing with lawmakers on Monday.

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

Wayan said if the purchase was approved by shareholders, BRI
would turn UFJ-BRI Finance into a leasing company focusing on
serving small and medium enterprises throughout the country.

The government owns an 80 percent stake in BRI, with the
remaining shares held by the public. BRI, the nation's fourth
largest lender by assets, has the largest network of branches in
the country.

Aside from UFJ-BRI Finance, the bank was also eyeing other
financial companies in the field of leasing this year.

In a 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
acquisitions, including boosting its stake in UFJ-BRI Finance.

"BRI has the ability to provide far more funds than stated in
the report for expanding its business this year through
nonorganic means," said Wayan.

The report also said the bank would channel some Rp 15.89
trillion in new loans in 2005, an increase of 26.04 percent from
last year. About 80 percent of the new loans will be channeled to
small and medium enterprises.

Through 2007, the bank's lending growth is projected to be
between 18 percent and 20 percent.

To support this expansion, BRI has estimated it will need
growth in third-party funds of between 8 percent and 10 percent
annually, with 60 percent of the funds coming from deposits.

For this year, the bank has projected third-party funds will
increase by Rp 10.4 trillion, a 12.72 percent rise from last
year's figure.

The bank also plans to unload some Rp 8 trillion of its
government recapitalization bonds this year. Some Rp 4.5 trillion
of the proceeds will be used for lending expansion, Rp 2 trillion
for investment in state bonds and the remaining Rp 2 trillion for
investment in other instruments.

The report also covered the bank's plan to open five new
branches, 50 supporting branches, 133 service offices, seven
sharia banking branches and 14 supporting branches for sharia
banking.