IBRA to decide on status of BCA sale

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) said on Tuesday it would decide on its divestment of PT Bank Central Asia (BCA) by Friday following calls to re-tender the sale of the bank.

IBRA chairman I Putu Gede Ary Suta said that the agency would evaluate how to decide on BCA's sale through a private placement on Friday.

"This (divestment) is an ongoing process. We will make an announcement later after the conclusion of the negotiations," said Ary Suta, following a hearing with the House of Representatives' Commission II for home and legal affairs.

He was commenting on calls by the Oversight Committee, which supervises IBRA's policies, to re-tender the sale of the government's 30 percent stake in BCA.

On Monday, the committee's chairman, Mar'ie Muhammad, said that BCA's tender should meet the requirements that would ensure a suitable strategic partner for the bank.

The government must divest a 40 percent stake in BCA this year as part of its agreement with the International Monetary Fund (IMF).

But BCA's sale has drawn some criticism in part because of the time-consuming process involved, and the lack of transparency with which it is being conducted.

Until now, it remains unclear who the bidders are and what stage of the bidding process has been reached.

Former coordinating minister for the economy and legislator Kwik Kian Gie said in an interview with the Kompas daily on Monday that he suspected collusion between legislators, government officials and BCA's bidder.

Kwik estimated that BCA's tender process was designed in such way to allow a certain bidder to win. He suspected this bidder was an investment firm acting as a vehicle for BCA's founding shareholder, the Salim Group.

IBRA forbids former shareholders of banks it has restructured from returning and taking a controlling stake in their former banks.

But it cannot trace the source of money used by an investment firm on behalf of investors to acquire BCA's stake.

Unconfirmed reports have said that only two bidders remain. They are New Bridge Capital and Indonesia Recovery Company Limited (IRCL). Both are investment firms.

Ary Suta was unable to confirm the identity of the bidders, saying he too had not yet been informed about their identities.

According to him, the tender process for BCA began in May last year and, to the best of his knowledge, attracted between 55 and 60 bidders.

IBRA earlier this month sold a 10 percent stake in BCA through a secondary public offering which, the agency said, was oversubscribed due to strong investor interest.

But this too was shrouded in controversy as some analysts suspected insider trading to have tainted the public offering.

BCA's lead underwriter, state owned PT Danareksa Securities, denied on Tuesday such allegations, promising to clarify the matter through an internal audit.

The Capital Market Supervisory Agency also announced on Tuesday that its preliminary investigations had found no evidence of insider trading practices.

The slow tender process has sparked concern that BCA may have failed to attract the right price.

According to Mar'ie, the government has decided to delay the divestment for this reason.

Earlier, IBRA statements only acknowledged the need for more time to negotiate a "better deal".

Separately, IBRA deputy for bank restructuring Felia Salim said the agency was lagging behind in the BCA sale, as it had been preoccupied with the acquisition of Bank Internasional Indonesia (BII).

IBRA suspended further negotiations with bidders during the secondary offering period late last month.

"It will take some time as we still have to proceed with some administrative and legal matters," Felia told The Jakarta Post.

She declined to say when she expected the completion of BCA's divestment process.

According to government documents, the BCA divestment is slated for completion for the third quarter, meaning by the end of September at the latest. (bkm)