Dai-Ichi Kangyo Bank mulls bid on Daiwa unit
Dai-Ichi Kangyo Bank mulls bid on Daiwa unit
TOKYO (Bloomberg): Dai-Ichi Kangyo Bank Ltd., Japan's third-
largest lender, is in talks to buy a majority stake in the
Indonesian banking unit of Daiwa Bank Ltd., a Daiwa spokesman
said on Wednesday.
Daiwa Bank, the smallest of Japan's nine nationwide commercial
lenders, is tackling chronic bad loans and debilitating write-
offs by cutting costs, staff and all operations abroad.
Indonesia accounts for a large chunk of the bank's
international business, comprising almost 30 percent of the
bank's lending to Asia, said Kenji Kaneko, a bank spokesman.
And while Daiwa must find a buyer for its overseas units, a
piece of an Indonesian bank might be an attractive acquisition if
it were cheap enough, said Walter Altherr, an analyst at Jardine
Fleming Securities (Asia) Ltd.
"Buying into Indonesia now at the right price could actually
be rewarding over the long term," said Altherr. "The economy has
hopefully bottomed, and the country could be laying a foundation
for a revival in the post-Soeharto era."
Daiwa Bank approached Dai-Ichi Kangyo Bank with the idea of
doing business together in Indonesia, although no details have
been set yet, Dai-Ichi Kangyo said in a release.
Daiwa's Kaneko denied a Nihon Keizai newspaper report that the
bank was close to handing all its international operations over
to Dai-Ichi Kangyo.
Daiwa Bank now holds 84.9 percent of P.T. Daiwa Perdania Bank
and plans to reduce that to less than 50 percent, Kaneko said.
Most Japanese lenders have been put their Asian business on
ice for the past year, after a plunge in currencies throughout
the region rattled economies and made it impossible for many
companies to pay back debt.
During the six months to June 30, Japanese bank lending to
Asia fell 25 percent to US$186.7 billion. Loans to Indonesia
totaled $19 billion, down 13.6 percent.
Daiwa Bank had 84.2 billion yen in loans to Indonesia at the
end of September, down 12.4 percent from the end of March.
Dai-Ichi Kangyo Bank, was the only one of Japan's six big
lenders whose Asian lending went up during the first half of this
business year.
The bank did not disclose figures for lending to individual
countries in Asia at the end of September. At the end of March,
it had 1.6 trillion yen in loans to countries in the region, 12
percent of which was to Indonesia.
Dai-Ichi Kangyo's own researchers, however, are still gloomy
about the prospects of recovery in Asia, and Indonesia in
particular.
"We expect economic conditions to continue to deteriorate,"
wrote Wong Keng Siong, an economist at the bank's research arm in
Singapore, in a report.
"In fact, the breakdown of law and order has degenerated into
a vicious cycle of unrest disrupting economic activity, hurting
investment sentiment, hence leading to more economic hardship
and civil unrest."
Dai-Ichi Kangyo Bank fell 7 yen, or 1 percent, to 602, amid a
0.6 percent drop in bank shares overall. Daiwa Bank fell 4 yen,
or 2.26 percent, to 173.
Japan's stock markets were open for a half day as the country
shuts for the New Year's holidays.