Govt expected to divest stake in Bank Niaga in May

JAKARTA (JP): The government is expected to complete the sale of more than 50 percent of its stake in the publicly listed Bank Niaga in May, according to the bank's president Peter B. Stock.

Stock said on Wednesday that the financial and legal consultants for the sale process had been appointed, and due diligence process by potential investors would be conducted in April.

"In May 2001 we expect to complete the final transaction," he told the House of Representatives commission IX on state budget and finance at a hearing.

The government plans to divest its shares in Bank Niaga as well as in the publicly listed Bank Central Asia (BCA) in the first semester of this year.

The government was supposed to seek approval for the divestment program from the House commission IX on Monday, but it was delayed until next Tuesday because legislators were busy with the investigation of two financial scandals allegedly linked to President Abdurrahman Wahid.

The sale of BCA and Bank Niaga was supposed to be completed at the end of last year, but the House recommended the government delay it due to unfavorable market conditions.

The International Monetary Fund was disappointed with the delay, prompting the Fund to also delay the disbursement of its US$400 million loan tranche to Indonesia. The divestment program was part of the country's major economic reform program promised by the government to the IMF, which is providing the current administration with some $5 billion in bailout funds.

The government via the Indonesian Bank Restructuring Agency (IBRA) nationalized Bank Niaga and BCA after the two banks were badly hit by the Asian financial crisis that started in the middle of 1997.

IBRA is expected to raise around Rp 3.6 trillion (US$383 million) from the sale of the two banks to contribute to its target to raise some Rp 27 trillion in cash to help finance the 2001 state budget deficit.

Elsewhere, Stock said that Bank Niaga's capital adequacy ratio per end of December 2000 stood at 21 percent, while non- performing loans (NPLs) at 27 percent.

The government requires that all banks must have a minimum CAR level of 8 percent and NPL level of not more than 5 percent by the end of this year or risk closure.

Stock said that net profit in 2000 jumped to Rp 64 billion from around Rp 5.69 billion in 1999.

He said that total assets as of end of last year was Rp 18.3 trillion, while lending totaled Rp 6.2 trillion.

He added that third party funds last year totaled Rp 14.4 trillion, and projected an increase by Rp 1.7 trillion in 2001.

Speaking at the same occasion, BCA president Johan Emir Setijoso said that BCA's CAR level as of end of last year stood at 40.05 percent, while NPL was at 2.1 percent.

He said that total assets reached Rp 95.47 trillion including the government's bonds worth Rp 59.6 trillion. Total lending was only Rp 8.28 trillion.

He said that third party funds totaled Rp 85.95 trillion.

BCA said in a written statement that pretax profit last year jumped to Rp 1.7 trillion from Rp 230 billion in 1999.

The government had sold 22.5 percent of its stake in BCA in May last year. (rei)