Danamon to issue subdebt

Danamon to issue subdebt

PT Bank Danamon Indonesia, the country's fifth-largest bank in asset terms, plans to issue Rp 500 billion (US$56.8 million) to Rp 1 trillion of subordinated bonds this year, its director, Riswinandi, told Dow Jones Wednesday.

"The issuance of the sub-debt is aimed at strengthening the bank's working capital and to increase its capital adequacy ratio," said Riswinandi. As of Dec 31, 2002, the bank's capital adequacy ratio was at 25.3 percent.

Riswinandi, who goes by one name like most Indonesians, didn't provide further details.

The government owns a 99.36 percent stake in Bank Danamon, which was formed after a merger of several local banks in the wake of the 1997-98 Asian financial crisis. It plans to divest most of its stake in the first quarter of this year.

The government is hoping to sell a 20 percent stake via a public offering and a 51 percent stake to a strategic shareholder, which will also have management control of the bank.

To attract investors, Bank Danamon's management recently boosted the share price of the bank by combining five existing shares to one new share. -- Dow Jones