IBRA and IMF differ on Bank Niaga divestment plan
The Jakarta Post, Jakarta
The International Monetary Fund (IMF) said the sale of the government's 51 percent stake in publicly listed Bank Niaga should be carried out as scheduled, although the government has hinted that it might back down from the plan if the prices offered by bidders were too low.
IMF senior advisor for Asia Pacific Daniel Citrin, who heads the visiting IMF delegation to the country, said that there was no change in the schedule for the sale of the medium-sized bank.
"We are committed to selling it within a competitive and transparent procedure. There is no change in targets," he said on Monday.
Separately, however, the Indonesian Bank Restructuring Agency (IBRA) said that it might scrap the plan should the bidders offer a price tag that falls far below the market price.
"The government will not sell the majority stake if the final bid is below half the market price," I Nyoman Sender, IBRA deputy chairman for the bank restructuring unit, said.
His remarks followed an announcement that Niaga's bidders had submitted their offers on Monday at a maximum of only about one- third of Niaga's share price.
Nyoman said the bids from the four short-listed bidders were in the range of Rp 15 to Rp 25 per share.
On Monday, the share price of Bank Niaga dropped to Rp 80.
In its bid to consolidate the country's banking sector, whose performance has been disappointing, and to raise cash to help finance the state budget, IBRA plans to sell a controlling stake in Bank Niaga in a process it hopes to be completed by June.
IBRA expects the final bid for the Bank Niaga stake to be made on May 27.
Restructuring the banking sector is an important part of the country's economic reform package agreed to with the IMF.
There are currently four bidders for the Bank Niaga stake, two of which are a foreign-led consortia.
The four are a consortia led each by Australia & New Zealand (ANZ) Banking Group Ltd., Malaysian financial group Commerce Asset-Holdings Berhad, Bank Victoria International and Batavia Investment Fund.
Asset-Holdings Group owns Malaysia's third largest banking group Bumiputera-Commerce.
Batavia Investment Fund is an Indonesian-based fund and was part of a consortia led by Singapore's Cycle & Carriage (C&C), which won the bid for about 40 percent of auto giant Astra International two years ago. C&C now holds 32 percent of Astra.
The government, through IBRA, holds 97.15 percent of Bank Niaga.
Niaga's sale comes after IBRA successfully completed the disposal of the long-stalled 51 percent of BCA last month, with a consortium, led by U.S.-based investment firm Farallon Capital, emerging victorious.
Getting credible investors from the divestment of local banks has been the government's priority in helping revive confidence in the banking industry.
Moreover, the government could use part of the proceeds to help cover the 2002 state budget deficit, which is projected to stand at about Rp 42 trillion (about US$4.6 billion).
The agency has been targeted to collect Rp 42.8 trillion from state asset sales this year.
The bank managed last year to post Rp 41.1 billion in net profit in the first ever positive balance sheet since the devastating financial crisis struck in 1997.
Also last year, the bank's credit adequacy ratio (CAR) stood at 18.7 percent, while its non-performing loans reached 9.75 percent.