Merrill Lynch, Danareksa named to lead BCA sale

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) has appointed U.S. investment bank Merrill Lynch and state-owned securities firm PT Danareksa Sekuritas to lead the divestment of the government's 40 percent share in the publicly listed Bank Central Asia (BCA) this year.

IBRA deputy chairman Felia Salim said the divestment would be implemented through a private placement and through the stock market.

"IBRA is ready to implement the BCA divestment. Financial consultants Merrill Lynch and Danareksa Sekuritas have been appointed to implement the divestment process," Felia said in a statement issued over the weekend.

She added that the divestment was expected to be completed within three months.

But she did not say how much shares would be allocated for the strategic sale and public offering.

The House of Representatives approved early last month the government's plans to divest its 40 percent share in BCA and 51 percent share in Bank Niaga, which is also a publicly listed bank.

IBRA, a unit under the finance ministry, took over the two banks after they were badly hit by the country's financial crisis that started in mid-1997.

The government, through the agency, now owns around 70 percent shares in BCA and 97 percent shares in Bank Niaga.

The International Monetary Fund halted the disbursement of its US$400 million tranche to Indonesia late last year partly due to the delay in the BCA/Bank Niaga divestment program, which was supposed to have been completed last year.

The House has insisted the divestment of BCA be conducted via a strategic sale and public offering to provide maximum proceeds for the government.

Legislators have also demanded that would-be strategic investors for BCA be top international banks or financial institutions. They also asked the government to forbid former BCA owner, the Salim Group, from buying back its shares in the bank.

IBRA officials, however, conceded that it would be difficult to implement the double-track sales method because a strategic investor would want to purchase large amount of shares. The officials also said strategic investors would be willing to make the purchase at a premium price.

Meanwhile, the Kompas daily quoted IBRA chairman Edwin Gerungan as saying the IMF had asked the agency to divest the 40 percent shares in BCA to strategic investors.

Edwin met with the visiting IMF team which arrived earlier in the week to begin negotiations with the government. The negotiations are expected to lead to the disbursement of the stalled $400 million tranche, which is part of the $5 billion loan promised by the fund in January last year to the current administration.

BCA, the country's largest private bank, operates 794 branch offices, 2,072 ATMs and almost 8 million accounts.

Last year, the bank reported a net interest income of 2.27 trillion ($216 million), a turn around from the previous year's net interest loss of Rp 4.21 trillion.

Felia said her predecessor at IBRA, Jerry Ng, had been appointed vice president of BCA during last week's shareholders meeting.

Jerry tendered his resignation in January, saying he wanted to return to the banking industry after completing his major assignments at IBRA, including preparing the BCA/Bank Niaga divestment program.

The shareholders meeting also named Dahlia Ariotedjo as the new director, and Alfred Rohimone as the new commissioner of BCA.

The sale of BCA and Bank Niaga will help IBRA meet its target of raising about Rp 27 trillion in cash this year to help plug the 2001 state budget deficit.

IBRA said the divestment of Bank Niaga, via a strategic sale, would be completed either in September or October this year. (rei)