IBRA to sell Bank Danamon shares via stock market first

IBRA to sell Bank Danamon shares via stock market first

Dadan Wijaksana, The Jakarta Post, Jakarta

The Indonesian Bank Restructuring Agency (IBRA) plans to sell a
controlling stake in publicly listed Bank Danamon via a
combination of secondary offering and strategic sale in a bid to
obtain optimum proceeds, according to the agency's top official.

Chairman Syafruddin Temenggung said on Thursday that a smaller
stake would be sold initially, via a secondary offering, to
obtain a benchmark price for the subsequent sale of a majority
stake to strategic investors.

Speaking to reporters on the sidelines of a hearing with House
of Representatives Commission IX on financial affairs, he said
that the sale strategy would be similar to that planned for Bank
Niaga shares.

The government, which, via IBRA, holds a 99 percent stake in
Bank Danamon, has promised the International Monetary Fund that
it would sell a majority stake in the bank to strategic investors
later next month.

IBRA is also now in the process of selling a stake as great as
71 percent in publicly listed Bank Niaga, which is expected to be
completed by mid-September.

The government, which controls more than 97 percent of the
shares in Bank Niaga, canceled earlier this month a plan to sell
a 51 percent stake in the bank due to low bids of only Rp 20 to
Rp 30 per share, compared with a market price of more than Rp 70
per share at the time.

IBRA then came up with a new sale strategy: some 20 percent
would be sold first via a secondary offering. The strategy for
the remaining 51 percent stake has yet to be decided.

"The bottom line is, we don't want to experience again what
happened to Bank Niaga," Syafruddin told reporters.

"As in the case of Bank Niaga, we won't accept bidding prices
for Bank Danamon that are either too low or too far below the
market price," he added.

IBRA has also planned to sell a majority stake in Bank Lippo
immediately after completion of the Bank Danamon sale. A 59.25
percent stake in Lippo is owned by the agency.

When commenting on whether a secondary offering would also be
an option in the case of Lippo, Syafruddin dismissed the
possibility.

"Already, 30 percent of the shares in Bank Lippo are traded
and held by the public (as investors). Consequently, there would
not be a secondary offering in the case of Lippo."

The sale of the government's shares in banks is part of
efforts to restructure the country's ailing banking industry.

The divestment program will also raise cash to help finance
the 2002 state budget deficit.

The government sold a controlling stake earlier in Bank
Central Asia (BCA) to a strategic investor. The sale has helped
cheer up investor sentiment in the country, as indicated by the
recent surge in the exchange rate of the rupiah against the U.S.
dollar to a nine-month high, and a strong rally on the local
stock market.

In a related development, Syafruddin also acknowledged that
progress in the planned merger of five banks under the agency's
supervision had been slow.

He said that final preparations were now under way to finalize
the merger as soon as possible. "It must be fast to avoid
damaging the banks; everything is now being taken care of."

The merger participants are Bank Bali, Bank Universal, Bank
Arthamedia, Bank Patriot and Bank Prima Express. IBRA has
targeted the finalization of the formal merger of those banks for
September.