Mandiri may join bidding for Permata

Tony Hotland, Jakarta

Giant Bank Mandiri has indicated it wants to join the bidding for Bank Permata if the government sets a reasonable price for the country's seventh-largest bank.

"If the price is relatively low, of course we'd be interested to bid. I think other banks would also be interested if the price were reasonable," Mandiri president E.C.W Neloe said on Friday.

He added, however, that Mandiri would wait until the government began the offer process by announcing the price for Permata shares, which it is slated to do on Monday.

Earlier reports said that Permata shares would be sold at a price 1.4 to 1.8 times their book value.

"If that's true, it's quite cheap. Why not (bid)?" Neloe said, adding that Mandiri's equity now stood at around Rp 28 trillion.

Neloe explained that if Mandiri did join the bidding process, the bank hoped to acquire the majority of the shares.

"We would buy the bank first and then try to merge (the two banks) later on. But we can't say yet whether we'd rather buy 71 percent or just 51 percent," he said.

The government has been trying to sell 71 percent of its 97.17 percent shareholding in Permata in a bid to raise cash to help finance the state budget deficit. It is aiming to collect around Rp 3 trillion (US$334.82 million) in cash from the Permata sale.

Formed after a merger of five ailing banks in 2002, Permata is the country's seventh-largest bank in terms of assets. Its total capital is around Rp 1.6 trillion, with assets standing at Rp 29.6 trillion.

Mandiri, meanwhile, is the country's largest bank in terms of assets, with about Rp 249 trillion in assets.

Several other banks have expressed an interest to acquire Permata, including Bank Negara Indonesia, Bank Central Asia, Bank Panin, Bank Artha Graha, Singapore's Temasek Holdings and Standard Chartered Bank.

Legislators suggested earlier that local bidders should be given priority to avoid foreign domination of the country's banking industry.