Foreign banks in talks with IBRA over stake in Bank Niaga
Foreign banks in talks with IBRA over stake in Bank Niaga
JAKARTA (JP): Several foreign banks have approached publicly
listed Bank Niaga, and the Indonesian Bank Restructuring Agency
(IBRA) over plans to acquire a stake in the bank through the
government's divestment program this year, Bank Niaga said on
Tuesday.
Bank Niaga president Peter B. Stok confirmed that talks had
taken place with local and foreign investors to purchase part of
the government's shareholding in the bank.
"It (the approach) is at a very early stage of our divestment
process," Peter told reporters at a seminar.
He said investors could purchase up to 51 percent of Bank
Niaga's shares, the amount the House of Representatives approved
recently.
Peter refused to comment further on the investors, saying it
was too early to reveal more details.
But he dismissed worries that legislators might reject a
foreign controlling stake in Bank Niaga.
He said when legislators approved the 51 percent Bank Niaga
share divestment, they did not specify by what means the
privatization should take place.
He hinted though that the government would most likely seek a
private placement, instead of a public offering in the local
stock market.
"IBRA is still studying this (the divestment options)," he
added.
A company official, who declined to be named, said the foreign
investors were banks from Malaysia, China and Australia.
The source said these banks wanted to control a local bank in
view of the prospect of a booming banking sector once the Asean
Free Trade Area (AFTA) has come into effect in the year 2003.
According to him, the divestment of Bank Niaga is scheduled
for August or September this year.
"The due diligence process for potential investors is
underway," he said.
The government, through IBRA, obtained a 97.15 percent stake
in Bank Niaga, after the agency injected the bank with Rp 9
trillion (about US$758.53 million) worth of recapitalization
bonds to take over its non-performing loans.
The divestment of Bank Niaga is part of the economic reform
targets set out by the government and the International Monetary
Fund (IMF).
Along with Bank Central Asia (BCA), the divestment in Bank
Niaga was slated for last year. Yet depressed market conditions
at that time prompted the House to reject the government's
schedule.
In response, the IMF has delayed the disbursement of its $400
million loan tranche until now.
At present, the market remains sluggish, if not worse, with
political tension dashing hopes of maintaining last year's strong
economic growth.
The banking industry has yet to resume its lending role, as
recapitalized banks still rely on government bonds for earnings.
Peter said that soaring Bank Indonesia certificate interest
rates put pressure on Bank Niaga's earnings from government
bonds.
He said all of the bank's recapitalization bonds carried fixed
rates, which ran the danger of being outstripped by Bank
Indonesia certificate rates.
"Of course for us in the banking industry, this (condition) is
very worrisome," he said, adding that he hoped interest rates
would fall in the near future.
Peter said that for this year, Bank Niaga planned to approve
between Rp 1 trillion to Rp 1.5 trillion in new loans.
"In the past three to four months we've extended Rp 200
billion to Rp 300 billion in new loans," he said.
According to a company official, the bank's total loans stood
at Rp 6.3 trillion.
Of that amount, 50 percent went into the manufacturing sector,
20 percent to the small and medium enterprise sector, 15 percent
to trading facilities, and 10 percent to the agribusiness sector.
The source further said that Bank Niaga was considering the
development of its assets through mergers.
He said some of the local banks with which Bank Niaga could
merge were Bank Bali, Bank Danamon, and Bank Universal.
He also said that the bank's capital adequacy ratio (CAR) was
21.2 percent, comfortably higher than this year's minimum 8
percent requirement set by Bank Indonesia.(bkm)