OCBC to provide funds to NISP

OCBC to provide funds to NISP

Dow Jones, Jakarta

Overseas-Chinese Banking Corp., Singapore's number three lender by assets, on Wednesday said it is ready to provide fresh funds for Bank NISP after it acquired a 22.5 percent stake in the Indonesian bank.

"In the future, we will be ready to provide fresh funds, if Bank NISP needs it," OCBC Chief Executive David Conner told reporters after signing a partnership agreement with the Indonesian bank.

"We are happy to increase our investment (in Bank NISP)," he said, adding that the acquisition will position OCBC "for long- term growth in the large Indonesian market."

He reiterated that OCBC intends to acquire a majority stake in NISP over time.

"But we don't have any specific time frame," he said.

Meanwhile, Bank NISP President Pramukti Surjaudaja expects the partnership with OCBC to make his bank more profitable and allow it to keep up with other banks.

Foreign banks offer expertise and financial muscle to Indonesian lenders, which, until the 1997-1998 crisis, extended a majority of their loans to affiliated conglomerates and therefore have little experience in assessing risk, analysts said.

Bank NISP is also hoping OCBC's entrance will make it easier for the local bank to raise capital in the future.

"OCBC's image as a reputable bank in the region will help us issue international bonds at a lower cost," Pramukti said, adding, however, that the bank has no immediate plans to do so.

Indonesian banks have been attracting interest from Singapore recently.

Last year, Temasek Holdings and Deutsche Bank AG jointly bought a 51 percent stake in Indonesia's fifth-largest lender, Bank Danamon Indonesia, for $350 million.

Meanwhile, United Overseas Bank Ltd., Singapore's No. 2 lender by assets, is expected to complete a purchase plan for a 23 percent stake in Bank Buana Indonesia by end-May.