Salim cancels plan to buy Danamon stake

JAKARTA (JP): Salim Group, the country's largest business conglomerate, and U.S. firm Credit Suisse First Boston (CSFB) announced Monday they had abandoned plans to buy a stake in publicly listed Bank Danamon.

The Salim Group and CSFB said in a joint media statement that the deal was canceled because of "recent developments" involving Bank Danamon.

The bank is among seven trouble-stricken banks whose managements have been taken over by the Indonesian Bank Restructuring Agency (IBRA).

"The Salim Group and CSFB today jointly announce that, to date, due to the recent developments of Bank Danamon, the proposed acquisition of a stake in Bank Danamon which has been under review since a memorandum of understanding dated Nov. 17, 1997 between PT Danamon International and the Salim Group, has not proceeded," the statement, signed by Phiong Philipus and Simon Subrata, said.

According to the memorandum of understanding, Salim Group planned to purchase a 19 percent stake in Bank Danamon and CSFB a further 10 percent at a price of Rp 700 per share.

Salim Group's chairman Anthony Salim, who is also the son of tycoon Liem Sioe Liong, said at the time that the transaction would create a strategic alliance between the Salim Group's banking division and Bank Danamon and would eventually benefit both parties.

Erick Varvel, the manager of CSFB in Indonesia, added that the 10 percent transaction would be a long-term investment for the company.

However, the performance of Bank Danamon has been deteriorating since then and it has been kept afloat by Bank Indonesia's liquidity credits.

Management of the Jakarta Stock Exchange suspended trading of Bank Danamon's shares on the exchange yesterday before it resumed in the afternoon.

The bank's share price shed Rp 125 to close at Rp 225 Monday on a total turnover of 31.79 million shares on the regular market. (aly)