RI to start selling 16% Bank Niaga stake

RI to start selling 16% Bank Niaga stake

By Shanthy Nambiar and Aloysius Unditu, Jakarta/Bloomberg

Indonesia's government will start selling a stake of as much as 16 percent in PT Bank Niaga this week, as it seeks to finance its budget deficit.

The stock will be offered to investors after the close of trading on the Jakarta Stock Exchange at 4:00 p.m. today, Mohammad Syahrial, president director of PT Perusahaan Pengelola Aset, a government agency in charge of selling state assets, said today. He didn't say at what price the stock would be sold.

"We were ordered by the by the government to divest the stake," he said in Jakarta. The stake has a market value of Rp 569.8 billion (US$63.3 million).

The Indonesian government is selling assets, including bank stakes, to raise funds to cover a budget deficit estimated at Rp 26.3 trillion this year. Asset sales are also aimed at recouping part of the more than Rp 450 trillion it spent to bail out lenders after the 1997 Asian financial crisis.

On Nov. 5, the Finance Ministry said the government plans to sell its remaining stakes in banks, including PT Bank Central Asia and PT Bank Internasional Indonesia, by the end of this year for Rp 10.68 trillion.

"It is good timing" given that earnings at many Indonesian lenders have rebounded this year, increasing the allure of bank shares, said Winston Sual, who helps manage $1 billion in Indonesian assets at PaninAsset Management in Jakarta. "The investors which now control the lender have a chance to increase their stakes in Niaga."

Bank Niaga has said that it expects profit to rise to Rp 500 billion this year from Rp 467.3 billion in 2003. It plans to extend Rp 2.5 trillion in new loans in the second half of the year, most of it to small-and medium-sized companies and to consumers, President Director Peter B. Stock said earlier.

Niaga's net income rose to Rp 435 billion in the first nine months of the year from Rp 330 billion a year ago.

UBS AG was hired to help manage the sale on the stock market of minority stakes in Niaga and three more lenders this year. The government has a 21.5 percent stake in Niaga, a lender partly owned by Malaysia's Commerce Asset-Holding Bhd.

Shares of Niaga, which have risen 30 percent this year, fell Rp 15, or 3.2 percent, to Rp 455 at the midday break on the Jakarta Stock Exchange today.

The Indonesian government owns 5 percent of Bank Central Asia, Indonesia's second-largest lender, 20.8 percent of Bank Internasional Indonesia, the No. 6, and 10.5 percent of PT Bank Danamon, according to data compiled by Bloomberg. On Nov. 4, the government raised Rp 1.74 trillion selling a 10 percent stake in Danamon, the nation's fifth-largest lender.