S&P affirms ratings on seven Indonesian banks

S&P affirms ratings on seven Indonesian banks

MELBOURNE (Dow Jones): Standard & Poor's credit rating agency yesterday affirmed its ratings on seven Indonesian banks and withdrew its rating on one bank, following the Indonesian government's recent announcement to either merge, freeze, or nationalize six of these eight banks.

The ratings on Bank Negara Indonesia and Bank Internasional Indonesia are affirmed, as these banks are unaffected by the government announcement, S&P said in a statement.

"Their long-term local currency ratings remain on CreditWatch, with negative implications as a result of the uncertain success of the Indonesian government's efforts to initiate a recovery of the banking sector," the agency added.

The public information ratings of triple-Cpi on state-owned Bank Dagang Negara, Bank Bumi Daya, and Bank Ekspor Impor Indonesia are affirmed following the government's plan to merge the three banks with state-owned Bank Pembangunan Indonesia, which isn't rated, and the corporate banking operations of state- owned Bank Rakyat Indonesia to form a new bank, to be named Bank Mandiri.

The ratings on Bank Dagang Negara, Bank Bumi Daya and Bank Exim will be withdrawn, and a rating will be assigned to Bank Mandiri when the merger takes place, S&P said.

The triple-Cpi rating on Bank Rakyat Indonesia is affirmed; the rating will be reviewed again when the full impact of the divestiture of Bank Rakyat Indonesia's corporate book on the bank's profile can be better assessed. The rating on Bank Central Asia remains "not meaningful," which is used to indicate the bank is subject to regulatory intervention.

"That is despite the government's plan to nationalize Bank Central Asia, along with Bank Danamon, Bank PDFCI, and Bank Tiara, on the grounds that the government intends to sell these banks in the near future," S&P said. None of those banks are rated by S&P.

The "not meaningful" rating on Bank Dagang Nasional Indonesia is withdrawn, reflecting the government's action of suspending its operations, plus those of Bank Umum Nasional and Bank Modern (both not rated), in likely preparation for eventual liquidation, S&P said. Neither Bank Umum Nasional or Bank Modern are rated.

Moody's also Wednesday withdrew the Ca long-term and Not Prime short-term foreign currency deposit ratings, and the financial strength rating of E for Bank Dagang Nasional Indonesia (BDNI).

The rating agency also confirmed the long-term foreign currency debt rating of Caa3 for BDNI Cayman Islands.