Sat, 20 Mar 2004

JP/13/Bumi

Bumi Putera to launch asset-backed securities

The Jakarta Post Jakarta

Bank Bumi Putera plans to issue asset-backed securities worth Rp 1 trillion (US$117.65 million) sometime this year in a bid to raise cash to boost its lending, according to the bank's president.

Bumi Putera president Winny E. Hassan said on Friday that the debt instrument would be backed up with the bank's car and automotive loan assets as collateral.

"If approved, Bank Bumi Putera will be the first bank in the country to launch asset backed securities," Winny said following its annual shareholders meeting as quoted by detik.com.

She explained that the bank was currently in the process of appointing an investment manager for the issue. The securities will be listed on the Surabaya Stock Exchange.

Asset-backed securities are bonds that are based on an underlying pool of assets. A special purpose trust or instrument is set up which takes title to the assets and cash flows are passed through to investors. The type of assets that can be used under such schemes range from residential mortgages to credit card receivables.

This is a relatively new type of debt instrument in the country.

Elsewhere, Winny said that the bank's lending business in the future would focus on consumer and retail loans.

She also said that prior to launching asset-backed securities, the bank would issue a sub-ordinated bond worth around Rp 200 billion in a bid to raise cash to increase the bank's capital adequacy ratio to 12 percent from the current 9 percent.

The debt instrument will be issued in June of this year.

Winny said that for this year, the bank was targeting a 30 percent to 35 percent increase in lending to Rp 3 trillion, which is lower than last year's lending growth of 40 percent.

Last year, the bank's net interest income was Rp 151.98 billion, a jump from the previous year's 86.57 billion. Net profit reached Rp 12.73 billion, of which 45 percent would be distributed as dividends, or Rp 6 per share.

Bank Bumi Putera is in the process of divesting around 58.41 percent shares. Three investors have expressed interest in the stake including the AJB Bumi Putera consortium, Bank Panin consortium, and a Malaysian consortium called International Commercial Bank (ICB).