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.