Government to offer controlling interest in scandal-ridden BNI
Government to offer controlling interest in scandal-ridden BNI
The Jakarta Post, Jakarta
The government will divest a 51 percent stake in scandal-hit
Bank Negara Indonesia (BNI) via a strategic sale in the first
semester after the completion of the bank's on-going
restructuring process.
Previously, the government planned to sell a 30 percent stake
in the bank through a secondary offering on the stock market.
But, Mahmuddin Yasin, the deputy assistant for privatization
programs at the Office of the State Minister for State
Enterprises, stated on Thursday that the government would sell
instead a controlling stake in the bank to a strategic investor
in bid to a secure a premium price.
"We are aiming for a strategic sale of up to 51 percent,"
Mahmuddin told reporters, adding that the setting of a premium
price was common when selling a bank's majority stake as it also
meant handing over control of the bank to the new investor.
He said BNI management had been given three months to conclude
its restructuring efforts, which are aimed partly at restoring
the bank's image following the recent disclosure of a Rp 1.7
trillion (US$202 million) lending fraud.
Mahmuddin added that the progress in the restructuring efforts
would affect the movement of BNI's shares on the stock market,
which would in turn affect the proceeds from the forthcoming
sale.
"That (share price movement) will depend on the progress of
the ongoing internal restructuring," he said.
BNI management had earlier said that the restructuring process
would focus mainly on improving internal control mechanisms to
avoid similar lending frauds in the future. Poor internal control
was primarily blamed for the latest scandal, where a branch
office was able to disburse export credits, which later turned
out to be fictitious, repeatedly over a space of about one year.
As part of its restructuring efforts, BNI has hired
consultancy firms and placed a banking expert on its board of
commissioners.
According to Mahmuddin, however, aside from improving its
controls, the government had also asked the bank to refocus its
business.
"It not just about control, the bank has been asked to also
improve its business plans as currently they are not focused," he
added, referring to the bank's current lending policy, which sees
it providing loans in almost equal measure to small and medium
enterprises all the way up to large-scale corporate lending.
BNI, the country's second largest lender in terms of assets,
is among a number of state-owned companies slated for sale this
year in an effort to raise some Rp 5 trillion in privatization
proceeds.
The government is relying on these proceeds to help cover the
state budget deficit, which for this year is projected to come in
at Rp 24.4 trillion, or 1.2 percent of the country's gross
domestic product (GDP).
Besides the proceeds, the government also expects other
benefits to accrue from the privatization program, which it is
hoped will encourage state-owned enterprises -- notorious for
their corrupt cultures, to increase their transparency,
efficiency and professionalism.
Elsewhere, Mahmuddin said the government was hoping that all
the companies slated for sale this year would be sold in the
first semester.
This was because after the first semester investors would most
likely apply a wait-and-see stance during the election period, he
said.