IBRA halts Bank Niaga share sale in market
The Jakarta Post, Jakarta
The Indonesian Bank Restructuring Agency (IBRA) said on Tuesday that it had temporarily suspended the sale of shares in publicly listed Bank Niaga through the stock market, to prevent the price from dropping further.
IBRA Chairman Syafruddin Temenggung said that the agency would resume the sale process once the price of Bank Niaga shares moved up again.
"We've temporarily stopped the sale for now, and we're waiting for the price to go up," Syafruddin said.
He added that the decision was in accordance with what had been agreed to with the House of Representatives, which requires IBRA to stop the sale if the price was moving downward toward the minimum price set by the agency.
Syafruddin refused to elaborate at what level the minimum price was set.
IBRA plans to sell up to a 20 percent stake in Bank Niaga through the stock market in a bid to test investors' appetite and seek a benchmark price for the sale of another 51 percent stake to strategic investors.
The government controls a stake of more than 97 percent in Bank Niaga after it bailed out and recapitalized the mid-sized bank in the late 1990s, while the public holds the remaining.
However, after selling about 100,000 shares of the bank since Friday last week, the price failed to rise again and got stuck at a price tag of Rp 45.
Bank Niaga closed at Rp .... on Wednesday.
Market players previously doubted the share price could go up again amid the current unfavorable market sentiment, raising concerns that it might jeopardize the agency's plan to complete the Bank Niaga divestment program in mid-September as promised to the International Monetary Fund (IMF).
A delay in the secondary offering of Bank Niaga would hamper IBRA's efforts in selling off other banks this year, namely Bank Danamon and Bank Lippo.
IBRA is targeted to raise some Rp 35 trillion in cash this year to help finance the 2002 state budget deficit. Proceeds from the sale of bank shares are important to help fulfill the cash target.
Syafruddin played down such fears, saying the cancellation was only temporary and that the schedule was still on track.
"There won't be any delays, the sale of the 51 percent stake in Bank Niaga will go on," he said.
It was a matter of price that had forced the agency to postpone the initial disposal plan in the first place, before it came up with the current mechanism.
IBRA had initially planned to sell a 51 percent stake in the mid-sized bank to strategic investors but the sale was canceled last month because of low bidding prices.
While the prices offered were ranging between Rp 25 and Rp 30, Bank Niaga's shares at that time were trading at about Rp 70.