IBRA flip-flops on Bank Niaga sale
IBRA flip-flops on Bank Niaga sale
Dow Jones, Jakarta
In a further sign of the confusion surrounding its asset sales program, the Indonesian Bank Restructuring Agency (IBRA) said Thursday that it was restarting a plan to sell a 20 percent stake in Bank Niaga through the stock market only a day after calling the sale off.
IBRA Wednesday canceled the sale because Bank Niaga's share price had fallen 25 percent to Rp 45 a share since the offering began July 1.
The agency said the price was below a minimum agreed with Parliament, but failed to stipulate what price would be acceptable.
On Thursday, however, Bank Niaga's share price rose momentarily to Rp 50 a share, and IBRA said it was selling again.
"IBRA has resumed selling shares in Bank Niaga on the market after the share price of the bank rose to Rp 50," agency deputy chairman I Nyoman Sender said.
The biggest net buyer of Bank Niaga shares Thursday was Trimegah Securities, a local securities firm that is an adviser to IBRA on the sale of Bank Niaga shares.
But the stock fell quickly back to Rp 45 in the afternoon as the wider market is unwilling to buy the shares at around Rp 50.
Until now, Bank Niaga's share price has been kept artificially high because only 3 percent of the total shares are in public hands. IBRA holds the remaining 97 percent. Plans to flood the market with a further 20 percent are likely to hurt the price, analysts say.
The stock price fall reflects that investors are demanding steep discounts to buy into Bank Niaga, which like most of the country's banks remains crippled by bad loans from the 1997 Asian financial crisis.
But pressure from nationalistic lawmakers and former bank owners not to sell assets such as Bank Niaga cheaply to foreigners is blocking any progress.
The agency has already delayed plans to sell a majority stake in Bank Niaga to a strategic partner once before. In May, IBRA was forced to call off an auction of a 51 percent stake after receiving bids from two shortlisted investors that were well below the market price at the time.
IBRA's assets sale program is at a standstill. The agency is supposed to raise Rp 42 trillion for the government budget this year, but is well behind target. With asset sales completely stalled, IBRA will rely on plans to sell Rp 150 trillion in bad debt next month to raise the total.