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)