StanChart, Farallon move to final stage in BCA bid
Berni K. Moestafa, The Jakarta Post, Jakarta
Two foreign consortia are neck and neck as they vie for a majority stake in Bank Central Asia (BCA) after passing the first round of tests by the Indonesian Bank Restructuring Agency (IBRA).
British-based Standard Chartered Bank Plc and U.S. investment firm Farallon Capital Management have passed Bank Indonesia's "fit and proper test" and what IBRA called its "drop dead test".
"StanChart and Farallon may proceed to the next and last stages of the bidding process," said IBRA chairman I Putu Gede Ary Suta in a press conference on Tuesday.
He said IBRA would now evaluate their final bids to come out with the best combination of price, business plan and conditions bidders set for the sale.
IBRA has said it would take about one week to 10 days to complete the evaluation and announce the winner.
Tuesday's announcement ended four weeks of impasse in the sale process, since four out of nine consortia submitted their final bids to IBRA on Jan. 28.
Dropping out of the race were two local competitors, the Bank Mega consortium and the GKBI consortium, though it remains unclear exactly why.
Ary Suta refused to say whether the two local bidders flunked Bank Indonesia's screening or IBRA's drop dead test.
Bidders were left in the dark while waiting for Bank Indonesia to complete its fit and proper test on them.
The waiting gave way to rumors over IBRA meddling with the final bids and also led to fresh protests against the sale.
Farallon on Monday threatened to pull out if the sale process was found to be corrupt.
The U.S. firm aired concerns over IBRA allowing bidders to change their final bids. Ary Suta admitted there were negotiations with bidders after their final bids were submitted.
But he declined to say whether the talks included bidders' pricing and their proposed terms and conditions.
StanChart and Farallon have reportedly made similar bids which would mean even a minor change could give an edge to one bidder.
The four weeks of waiting also saw new pressure against the sale.
State Minister for National Development Planning Kwik Kian Gie challenged the government's stance, saying he opposed the sale.
Kwik questioned the sale while some Rp 58 trillion (about US$5.8 billion) worth of government bonds was still tied up in the bank. These bonds earn the bank some Rp 7 trillion of public- funded coupon rates a year.
BCA's sale is expected to generate only between Rp 5 trillion to Rp 6 trillion in cash for the government.
Gaining momentum on Kwik's statement was BCA's labor union whose rallies against the sale add risks to an already shaky sale process. BCA employees are demanding that BCA remain under government control.
IBRA took over BCA after injecting the bank with government bonds to bail it out from the financial crisis in the late 90s.
The government nationalized a number of banks, and selling them now should help it recover part of the bail out funds.
Picking BCA as the first bank to be sold was expected to generate investors' appetite for further sales of IBRA banks.
BCA is one of the most attractive banks in terms of asset value and its strong foothold in the retail banking sector.