Danamon sells 14% shares in Chinatrust

JAKARTA (JP): Publicly listed Bank Danamon agreed on Wednesday to sell 14 percent of its shares in Bank Chinatrust Indonesia, a joint-venture bank, to Taiwan's Chinatrust Commercial Bank.

Danamon said in a media statement that the transaction would allow Chinatrust Commercial Bank to control a 99 percent stake in the joint-venture bank.

"This does not go against the Bank Indonesia ruling that allows a foreign bank to own up to 99 percent shares in a joint- venture bank," it said.

The statement did not reveal the price of the transaction.

Bank Chinatrust Indonesia was formed in 1996 with the Taiwanese bank owning 85 percent shares and its local partner Bank Tamara the other 15 percent. But the latter was acquired by Bank Danamon in 1999.

At the end of 2000, Bank Chinatrust Indonesia had total assets of around Rp 1.43 trillion, and profits totaling Rp 49.3 billion. The Jakarta-based joint-venture bank has branches in Bandung and Surabaya.

Chinatrust Commercial Bank is a publicly listed bank with total assets of around US$23 billion. The bank is one of the top banks in Taiwan focussing on retail, corporate and investment banking.

There have been rumors that Chinatrust Commercial Bank is also interested in purchasing government shares in publicly listed Bank Central Asia (BCA).

The Indonesian Bank Restructuring Agency (IBRA) is planning to sell around 40 percent of government shares in BCA through the stock market or as direct placement to institutional investors. The divestment program is expected to be completed in July or August.

But rumors suggested that Chinatrust wanted to purchase the BCA shares via direct placement in a bid to obtain majority shareholder status.

However, legislators have insisted that the sale must be conducted by a double-track mechanism and that any strategic partner willing to purchase government shares in BCA must be classified as a major international bank. BCA is the country's largest private bank.

The last requirement had been stipulated to avoid BCA's former owner, the Salim Group, from owning shares in the bank. The Salim Group had been lambasted for its role in abusing BCA, which caused the government to spend a lot of taxpayers money in 1999 to bailout the bank.

Elsewhere, Danamon said that it had also signed a cooperation agreement with Chinatrust Commercial Bank, under which Indonesian workers in Taiwan can send money back home via the network provided by the two banks.

Danamon said that the remittance service provided by Chinatrust was popular among Indonesian workers in Taiwan, currently around 70,000 workers.

Danamon said that in the future, the cooperation could be expanded to other services including business finance, and correspondent banking.(rei)