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.