Commerce eyes growth, not Bank 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.