Singapore's DBS Bank to acquire 85% of MBB

JAKARTA (JP): Singapore's DBS Bank has entered into a conditional agreement with the Bank of Tokyo-Mitsubishi to buy its 85 percent stake in PT Mitsubishi Buana Bank (MBB).

Tan Soo Nan, DBS Bank's deputy president, said here yesterday that his bank would buy 85 percent of MBB, a foreign joint venture bank in Indonesia, for Rp 131.75 billion (about US$54.9 million).

"The transaction was negotiated and agreed upon on a willing buyer and willing seller basis," Tan said.

He said DBS Bank also agreed to sell 42.5 percent of its Indonesian joint venture, PT DBS Buana Tat Lee Bank (DBT), to its joint venture partner Tat Lee Bank.

Tat Lee Bank would buy the 42.5 percent for Rp 78.45 billion (about $32.7 million).

Tat Lee would then own 85 percent, he said.

Tan said that with 85 percent of MBB, DBS Bank would be in a better position to expand in Indonesia.

"We will widen the scope of our activities, offer more services and expand the branch network beyond Jakarta and Surabaya to other Indonesian cities," he said.

He said the aim of the acquisition was to cater to the growing demand for syndicated loans from Indonesian businesses.

He said DBS Bank had arranged and co-arranged around US$2.9 billion of syndicated loans for Indonesian companies including US$1.9 billion for PT Paiton Energy Co, US$197 million for PT Pan London Sumatra Plantation and US$180 million for PT Grand paradise in 1995/1996.

"Indonesia offers great potential for DBS Bank," Tan said.

PT Bank Buana Indonesia (BBI), its former partner in DBT, has a 15 percent equity in MBB.

Soetadi Limin, BBI's deputy president, said his bank planned to raise its stake to about 20 or 25 percent in the next few months.

According to DBS Bank, approvals from the Monetary Authority of Singapore, Bank Indonesia and Indonesia's Ministry of Finance have been given for DBS Bank's acquisition of MBB.

It said the MBB would be funded by internal resources.

MBB was set up in 1989 and has a branch in Surbaya.

The bank decided to sell MBB and do business in Indonesia through its branch network after it was formed by a merger between the Bank of Tokyo and Mitsubishi Bank.

MBB's Japanese related loan assets will be transferred to BTM's Jakarta branch prior to the finalization of its sale to DBS Bank.(09)