CAHB eyes growth, not Niaga job cuts
CAHB eyes growth, not Niaga job cuts
The Jakarta Post, Jakarta
Entering Indonesia's banking sector as it languishes in the
doldrums, Malaysia-based Commerce Asset Holding Berhad (CAHB)
said its focus was on expanding the business of newly acquired
Bank Niaga, while promising no lay-offs in the country's ninth
largest bank.
CAHB said on Monday the acquisition would allow it to capture
a share of Bank Niaga's consumer finance and commercial business.
"We are delighted to be working with Bank Niaga, which is one
of Indonesia's best managed and reliable banks with a recognized
brand and a growing commercial and retail franchise," said CAHB
director Rozali bin Mohammed Ali in a press statement.
"This deal ensures Bank Niaga customers that Bank Niaga is run
by a strategic investor focused on expanding the products and
services to meet their increasingly specialized needs."
"In terms of employees, all Bank Niaga employees can be
confident that CAHB is interested in growth, not reduction," he
added.
The Indonesian Bank Restructuring Agency (IBRA) sold a 51
percent stake in Bank Niaga to CAHB for Rp 1.05 trillion (about
US$114 million) last Friday.
Following the sale, IBRA's stake in Bank Niaga fell to 46
percent from 97 percent. Proceeds from the bank sale will be used
to help cover the state budget deficit this year.
Bank Niaga marks the second sale to a foreign investor of a
bank taken over by IBRA, following the sale of a 51 percent stake
in Bank Central Asia (BCA) to an American investment firm last
March.
Both deals followed lengthy public debates over the benefit of
selling nationalized banks after the government, through IBRA,
bailed out scores of banks with billions of dollar in state bonds
during the 1997 economic crisis. The government earned some Rp 5
trillion from selling BCA but must still pay the bank around Rp 7
trillion a year because of the bonds.
CAHB gave assurances that it was a long term investor
committed to making Bank Niaga a success -- an argument the
government used to win over skeptical legislators to secure their
approval for the sale.
"We believe that CAHB and Bank Niaga have a range of
complementary skills, and that a combination of Bank Niaga's
management expertise and CAHB's know-how will benefit all our
stakeholders," Rozali said.
CAHB is the financial group that owns Bumiputra-Commerce Bank
Berhad, Malaysia's second largest bank with 3.5 million
customers.
Listed on the Kuala Lumpur Stock Exchange since 1987, CAHB is
engaged in various financial services like commercial banking,
merchant banking, stockbroking, venture capital, and life
insurance.
The group was founded in 1924 as a family bank under the name
Bian Chian Bank Limited, and has since became a financial group
with interests in over 20 companies.
It said its entrance into the Indonesian market was part of a
wider strategy to invest for "long-term growth in ASEAN markets".
The sale of Bank Niaga, however, comes against the backdrop of
recurrent protests over the sale of state assets to foreigners.
Like BCA, Bank Niaga's sale faced opposition from legislators
who questioned the gains of selling the bank after its costly
bail-out.
Bank Negara Indonesia (BNI) banking analyst Ryan Kiryanto said
old issues like these could hamper IBRA's future bank sales.
"Such problems should be dealt with first before launching
another bank sale. The government and legislators must settle
their differences internally," he said.
Banking analyst Mirza Adityaswara agreed but added that both
sides should have learnt by now how to proceed with bank sales
without stumbling over the same old obstacles.
The government does not need legislative approval for state
asset sales but has preferred to seek it so as to avoid a
political backlash.
IBRA chairman Syafruddin Temengung has said that the agency
had yet to secure approval for selling its third bank, Bank
Danamon, even though three letters had been sent asking for
support.