Wed, 02 Jul 2003

IBRA to start sale of Bank Danamon, Bank Niaga

The Jakarta Post, Jakarta

The Indonesian Bank Restructuring Agency (IBRA) said it would start an auction for 20 percent shares in publicly listed Bank Danamon on Thursday, in a process it expects to complete within two weeks.

"We will open the door for as many investors as possible," IBRA Chairman Syafruddin Temenggung said on Tuesday.

He did not provide further details, but said that IBRA expected to sell it at a floor price of Rp 1,200 per share, similar to the price paid by a consortium of Temasek Holdings Pte. Ltd., and Deutsche Bank in early May when it acquired a 51 percent stake in Danamon.

Temasek is an investment arm of the Singapore government.

IBRA currently holds around 48.13 percent shares in Danamon.

The agency has initially planned to sell 20 percent of the shares not long after the disposal of the 51 percent stake. But the plan has been delayed, which some IBRA officials say is due to the disappointing market reaction. People familiar with the situation, however, said that the delay was due to a fee dispute with the investment banks arranging the sale.

IBRA has declined to comment on this.

Meanwhile, Syafruddin said the auction of the 20 percent stake in publicly listed Bank Niaga would also start some time this week with the floor price to be determined later.

Last year, IBRA sold a 51 percent stake to Malaysian group Commerce Asset Holding Bhd. IBRA still own a 45.1 percent stake in the bank.

The divestment of the two banks form part of IBRA's efforts to restructure the country's banking sector. By involving as many private investors as possible, it is expected the banks would promote professionalism, thus reviving public confidence in the banking sector.

Equally important, the government could also rake in the proceeds to be used in part to help cover the 2003 state budget deficit.