Panin moves ahead with Bumiputera acquisition plan

Panin moves ahead with Bumiputera acquisition plan

Dadan Wijaksana, The Jakarta Post, Jakarta

Publicly listed Bank Panin said on Wednesday that upon completing
an assessment of Bank Bumiputera's financial performance, it had
decided to go ahead with plans to purchase a 58.4 percent stake
in Bumiputera.

As stated in a press statement, the medium-sized Panin would
now seek official approval from the bank's shareholders at a
meeting, scheduled for May 14.

"The bank will provide the funding for the acquisition of the
58.4 percent stake, accounting for 1.17 billion shares, from our
own internal cash," it said, without elaborating as to how much
it had set aside.

Panin started the assessment of Bumiputera on April 1, it
added.

Aside from expanding its network and performance, Panin said
another reason for the acquisition was that the two banks shared
almost identical credit portfolios and client characteristics.

Having survived the 1997-1998 banking crisis without the help
of the government's bail-out program, Panin has so far been
performing fairly well. As of Dec. 31 last year for instance, it
posted a whopping 315 percent increase in after-tax profit from
2002.

Panin also recorded a capital adequacy ratio (CAR) of 42.3
percent and loan to deposit ratio (LDR) of 71.2 percent in 2003,
with assets valued at Rp 18.9 trillion.

There are now three bidders competing for the controlling
stake in Bumiputera including Panin. The other two are the
Zurich-based ICB Financial Group Holdings Ltd. and insurance
company AJB Bumiputera 1912.

AJB already currently holds a 41.02 percent stake in
Bumiputera.

According to Dow Jones, the ICB Financial Group is an
investment vehicle of former Malaysian finance minister Daim
Zainuddin.

Bank Bumiputera has said that the winning bidder would be
announced on May 17, although the closing of the transaction
would only be completed on May 28 pending approval from Bank
Indonesia.

The Banking Law stipulates that any party wishing to own a
majority stake in a national bank must secure approval from the
central bank through a screening evaluation.

A couple of medium-sized banks have previously sold shares to
strategic investors.

Only recently, Singapore-based Overseas-Chinese Banking Corp.
(OCBC) acquired a 22.5 percent stake in Bank NISP. These followed
the purchase of smaller stakes in NISP and Bank Buana by the
World Bank's private investment arm -- the International
Financial Corp. (IFC).

NISP and Buana also survived the 1997-1998 crisis without the
government's bail-out package under the recapitalization program.