Thu, 12 Feb 2004

House approves sales of Permata, other banks

Rendi A. Witular, The Jakarta Post, Jakarta

The House of Representatives finally approved on Wednesday the government's plan to sell a majority stake in Bank Permata and a minority stake in several other banks.

Chairman of House Commission IX on financial affairs Emir Moeis said the commission approved the sale of a 71 percent stake in Permata, with 51 percent to be sold to a strategic investor and 20 percent to public investors.

The commission approved the plan at a hearing with Minister of Finance Boediono, State Minister of State Enterprises Laksamana Sukardi and Indonesian Bank Restructuring Agency (IBRA) chairman Syafruddin Temenggung.

IBRA holds a 91.3 percent stake in publicly listed Permata.

Despite the approval, it is unclear whether the Permata sale can be completed before IBRA's five-year mandate expires on Feb. 27.

The government has said it would not engage in a fire sale of Permata, and if IBRA was unable to complete the divestment program before its tenure ends, the sale process would be handled by a new agency as yet to be set up under the finance ministry.

Permata, the 10th largest bank, was established two years ago by merging five ailing banks, including Bank Bali.

Permata shares surged by 12.5 percent, from Rp 40 to Rp 45, on Wednesday after the announcement.

Bank Panin, the country's ninth largest bank in terms of assets, and Bank Artha Graha, founded by Tomy Winata, were reportedly interested in bidding for Permata.

Aside from IBRA's impending closure, another obstacle to the sale process is a long-running legal feud involving Permata over a Rp 456.5 billion account at the bank.

The commission has urged IBRA to clear all potential stumbling blocks before launching the sale.

In response, Syafruddin said IBRA would not launch the sale unless the case was cleared or if investors willing to take on the risk of the dispute emerged.

The case is linked to the 1999 Bank Bali scandal, in which the funds were transferred to PT Era Giat Prima (EGP), owned by Djoko Tjandra. Djoko was accused of illegally acquiring the funds from Bank Bali, but the Supreme Court acquitted him of all criminal charges and called upon IBRA to return the funds to EGP.

Bank Bali and its assets were subsumed during the merger to establish Permata, including the disputed Rp 456.5 billion.

IBRA, however, has refused to return the funds, as it would affect the financial condition of Permata. Djoko took the case to the State Administrative Court, which ruled in favor of IBRA.

The Supreme Court is expected to issue a new verdict this month.

During Wednesday's hearing, the commission also approved the government's plan to sell 1.48 percent of its shares in Bank Central Asia (BCA), 7.85 percent in Bank Danamon, 5.65 percent in Bank Niaga and 1.99 percent in Bank International Indonesia (BII).

The government has remaining shares of 6.48 percent in BCA, 28.35 percent in Danamon, 26.15 percent in Niaga and 22.49 percent in BII.

Syafruddin said the government planned to maintain its ownership in Danamon, Niaga and BII by 20.5 percent to retain its supervisory role.

The sale of these remaining shares are to be conducted via private placement and is expected to be concluded before the elections with total proceeds estimated at Rp 1 trillion.

Proceeds from the sale are to be used to help finance this year's state deficit.