IBRA increases Bank Niaga stake for sale to 71%
Dadan Wijaksana, The Jakarta Post, Jakarta
The Indonesian Bank Restructuring Agency (IBRA) said on Tuesday it would sell up to 71 percent shares in publicly listed Bank Niaga, of which the first 20 percent stake would be sold via the stock market.
IBRA chairman Syafruddin Temenggung, however, said that the sale mechanism for the initial 51 percent stake had not been decided.
"The sale of the Bank Niaga stake should be completed by mid- September," he told reporters.
The government via IBRA had initially planned to sell a 51 percent stake in the mid-sized bank to strategic investors. But the strategic sale was canceled on Sunday because the only two bidders, consortia led by Australia's ANZ Banking Group and Commerce-Assets Holding Bhd., had offered low bidding prices.
The Financial Sector Policy Committee (FSPC), which groups several senior economics ministers and has the final say on the government's major asset sale program, then ordered IBRA to seek other divestment mechanisms to obtain greater proceeds.
IBRA controls more than a 97 percent stake in Bank Niaga after the government bailed out and recapitalized the bank in the late 1990s.
The sale of the Bank Niaga stake is expected to generate proceeds to help finance the state budget deficit, which this year is estimated at 2.5 percent of gross domestic product (GDP). IBRA is targeted to raise more than Rp 35 trillion (about US$4 billion) in cash in 2002.
An FSPC official said earlier that the two aforementioned strategic investors only offered a price of Rp 20 to Rp 30 per share for the 51 percent Bank Niaga stake, much lower than the price of the Bank Niaga shares of around Rp 70 on the stock market when the final bids were entered.
IBRA has insisted that the bids should be around the market price level.
But analysts have said that the market price could not be used as a benchmark because less than 3 percent of Bank Niaga shares are listed on the stock exchange.
They added that the bank's price-to-book value was around Rp 15 per share, rendering the price offered by strategic investors as reasonable.
The new IBRA strategy, selling the first 20 percent stake via the stock market, should provide a benchmark for the sale of the remaining 51 percent stake.
Elsewhere, Syafruddin said that the agency would still have to discuss the new divestment strategy with related institutions, including the House of Representatives and the Capital Market Supervisory Agency (Bapepam).
The House has only approved the 51 percent sale of the Bank Niaga stake.
The Bank Niaga divestment program was supposed to be completed this month, as promised by the government to the International Monetary Fund, which is providing the country with a multibillion dollar bailout.
The fund has insisted that the government should not delay the sale program so it could carry on with other banks sales.
Following the completion of the Niaga sale, the divestment process will continue, with Bank Lippo and Bank Danamon being next on the list. All sales should be completed before the end of the year.
So meeting the deadline will be decisive as delays in the assets sales program, such as the Niaga sale, would not only hamper IBRA's efforts to raise a huge amount of cash this year, but would also hurt the rising confidence of foreign investors in the country's economic reform program.
The IMF has stated that the country's divestment of Bank Central Asia, the first ever, has managed to lure capital inflow from investors.