Low bids may lead IBRA to alter Bank Niaga sale strategy

The Jakarta Post, Jakarta

The Indonesian Bank Restructuring Agency (IBRA) is mulling over other ways to divest the government's 51 percent stake in publicly listed Bank Niaga if the current plan to sell the stake to strategic investors fails to generate attractive bids.

IBRA Chairman Syafruddin Temenggung said on Wednesday that the alternative ways included selling the stake via a secondary offering, or private placement.

However, he said that the alternatives would only be decided once the shortlisted bidders had submitted their final bids by the May 27 deadline.

IBRA said it wanted to sell the Bank Niaga stake at a price no less than 10 percent below the market price by the May 27 final bid deadline.

IBRA, which controls the government's 97.15 percent stake in the medium-sized bank, wants to complete the divestment program next month. The sale will raise cash to help finance the state budget deficit. The program is also part of the country's bank restructuring program agreed with the International Monetary Fund.

The agency has shortlisted four bidders for the Bank Niaga stake including consortia led respectively by Australia's ANZ Bank, Malaysia's Commerce Asset Holding Bhd, Batavia Investment Management Ltd., and Bank Victoria International.

Reports on Monday, however, said that preliminary bids submitted by the bidders were only Rp 15 per share to Rp 25 per share, much lower than the Monday closing price of Rp 80.

The low bids prompted IBRA deputy chairman I Nyoman Sender to threaten to cancel the sale program if bids by the final deadline remained very low.

The IMF, however, warned the government not to delay the sale program.

The Financial Sector Policy Committee (FSPC), which groups senior economic ministers and has the final say on the country's major bank restructuring program, later said that the divestment program would go ahead as scheduled.

News about the low bids has caused the price of Bank Niaga shares to go down. On Wednesday, Bank Niaga was quoted lower at Rp 65.