S&P affirms ratings on Bank Danamon, Niaga

S&P affirms ratings on Bank Danamon, Niaga

JAKARTA (JP): International rating agency Standard & Poor's
(S&P) said yesterday it affirmed its "BB" long-term and "B"
short-term counterparty ratings on Bank Danamon.

The agency said in a statement that the affirmation of the
ratings followed the announcement that the Salim Group and Credit
Suisse First Boston were likely to acquire 19 percent and 10
percent stakes in the bank, respectively, from PT Danamon
International.

Danamon International is currently the largest shareholder in
Bank Danamon with a 48 percent stake. The remaining 52 percent is
held by public shareholders.

"The rating affirmation reflects S&P's view that while the
share transaction does not inject any capital into Bank Danamon,
the addition of two significant shareholders increases the
equity-raising flexibility of the bank," the statement said.

S&P said it had a negative outlook for Bank Danamon,
reflecting its opinion that the bank's asset quality and
profitability, as with almost all Indonesian banks, were expected
to weaken as a result of the increasingly challenging financial
environment.

The agency also said the "BB/B" counterparty credit ratings on
Bank Niaga remained on its credit watch, with negative
implications.

The agency's credit watch on Bank Niaga followed PT Tunasmas
Paduarta's acquisition of 50 percent of Bank Niaga's share
capital.

Tunasmas Paduarta is part of the Tirtamas Group, controlled by
Hashim Djojohadikusumo.

"Discussions with the new majority owners are continuing, and
S&P expects to resolve the credit watch placement by mid-
December," the agency said. (rid)