IBRA kicks off 51 percent Bank Niaga sale process
The Jakarta Post, Jakarta
The Indonesian Bank Restructuring Agency (IBRA) launched on Monday the sale of a 51 percent stake in Bank Niaga through a private placement process it hopes to finalize by next June.
IBRA said in a statement it would start sending out bidding invitations to a number of potential investors in the second week of this month.
The agency did not say how many prospective buyers it was eying, but expected to short list bidders by the third week of April.
From there until the second week of June, the short-listed bidders would undergo Bank Indonesia fit and proper tests.
The final bids are expected to come in during the fourth week of May, with a winner to be announced one week later in June.
IBRA said a sales and purchase agreement for the 51 percent Bank Niaga could be signed in the second week of June.
Bank Niaga's sell-off launch comes at a time when IBRA is in the midst of selling a 51 percent stake in Bank Central Asia (BCA).
As controversy still surrounds the sale of BCA, analysts expect investors to hold back until after IBRA produces a trouble-free BCA sale before they start eying other banks.
The launching of the Bank Niaga sell-off also comes as the government remains undecided over whether or not to replace the bank's fixed rate government bonds with variable rate ones.
Bank Niaga earns a 12 percent flat interest rate from its government bonds, against some 16 percent it would earn if they were traded for variable rate bonds.
The government planned to swap the fixed rate bonds for variable ones to lure investors. The plan, however, has yet to receive legislative approval.
Nonetheless, Bank Niaga has been able to leverage its fee- based income, which helped it return to profit last year, since the 1997 financial crisis that crushed the banking sector.
The crisis forced IBRA to inject Bank Niaga with government bonds, for which in return IBRA received a controlling stake in the publicly listed bank.
Bank Niaga is 97.15 percent owned by the government through IBRA.
IBRA chief I Putu Gede Ary Suta said he hoped there would be a smooth sale process to restore confidence in investors that its asset sale program was on the right path.
The agency has been struggling in its efforts to sell state assets, oftentimes facing opposition from legislators and employees.
The latest example has been the protests by employees of BCA rejecting foreign ownership of the bank after two out of the four final bidders turned out be foreign led consortia.
Advising IBRA on the Bank Niaga sale is PT Trimegah Securities, which attempted to bid for a 51 percent stake in BCA, but backed down from a final bid for as yet unknown reasons.
Trimegah was selected out of 15 consultants during what IBRA called a "beauty contest" process.
Its legal advisor for the sale is noted lawyer Kartini Mulyadi.
As for the proceeds the government will rake in from the deal, Ary refused to give details, simply saying: "We will try to obtain an optimal price."
IBRA must raise Rp 42.8 trillion (some US$40 billion) from its asset sales program this year to help contain the 2002 budget deficit at 2.5 percent of Gross Domestic Product (GDP).