Thu, 31 Jul 2003

CIMB to inject capital into Niaga Sekuritas

The Jakarta Post, Jakarta

Commerce International Merchant Bank (CIMB), a unit of Malaysia's financial group Commerce Asset Holdings Bhd., will inject fresh money into PT Niaga Sekuritas in return for a 51 percent stake in the securities firm.

Peter B. Stock, president of the publicly listed Bank Niaga, which owns the securities firm, said that the capital injection was needed to meet the minimum capital requirement set by the Capital Market Supervisory Agency (Bapepam), and to expand the firm's operation beyond the brokerage business.

"Possibly in the near future CIMB will enter Niaga Sekuritas, but this has yet to be approved by the shareholders," he was quoted by as saying on Wednesday.

Commerce Asset Holdings purchased a controlling 51 percent stake in Bank Niaga last year from the Indonesian Bank Restructuring Agency.

Peter did not say how much money CIMB would inject into the securities firm, but he said that the firm's current adjusted net working capital level was around Rp 17 billion (US$2.07 million).

Bapepam has required that all securities firms in the country have a minimum capital level of Rp 25 billion by the end of next year.

The capital market watchdog has also stipulated that by the end of this year, the capital level must be at least Rp 10 billion.

But many securities firms have been struggling to meet the year-end capital level requirement, putting them at a risk of being expelled from the industry. Some analysts have said that if the threat is realized, share transaction on the Jakarta Stock Exchange might drop. Bapepam plays down such concern, saying that share transactions are dominated by the 10 largest brokerage firms.

Bapepam said last week, that out of the 170 securities firms in the country, only 60 firms had met the year-end minimum capital requirement.

The agency has no intention of lowering the requirement as it has been postponed for over a year.