Top global banks battle to acquire Permata

Rendi A. Witular The Jakarta Post/Jakarta

Leading international banks are competing in a tender to acquire a controlling stake in Bank Permata, the country's seventh largest bank in terms of assets.

British banks Barclays Bank Plc. and Standard Chartered Plc., Singapore's United Overseas Bank (UOB), Australia and New Zealand-based ANZ Ltd., Holland-based Rabobank and two Malaysian- based banks, Commerce Aset-Holding Bhd and Malayan Banking Bhd (Maybank), are among the bidders that have officially expressed interest in acquiring the 51 percent stake in Permata, said Mohammad Syahrial, president of the Ministry of Finance's asset management company PT Perusahaan Pengelola Aset (PPA), which holds the Permata stake.

"There are about eight consortiums that have officially filed their interest .... With such interest we expect to get a higher price for Permata," said Syahrial on Friday.

Other consortiums are each led by local banks: Bank Mandiri, which has teamed up with Bank Buana, and Bank Rakyat Indonesia (BRI).

PPA set Friday afternoon (5 p.m.) as the deadline for bidders to make an initial bid, while the winner is expected to be announced in October or November.

The overseas banks will cooperate with local institutions to form consortiums.

According to earlier reports, ANZ is working with medium-sized Bank Panin, while Standard Chartered has announced that local automotive giant PT Astra International is on its side for the bid.

The bid for Permata will be the third attempt by Stanchart, which obtains a huge portion of its earnings from Asia, to acquire a local bank.

Barclays and Rabobank are reported to have inked an agreement with Bank Danamon, while Maybank has sealed a deal with state pension fund operator PT Jamsostek.

The bid is most likely to be dominated by foreign banks, as most of the local partners are partly or wholly controlled by foreign banks.

Danamon is 52 percent owned by German-based Deutsche Bank AG and Singapore's Temasek Holding Pte., Buana is 23 percent owned by UOB and Panin is 25 percent owned by ANZ. Danamon, Buana and Panin are the countries fifth, 10th and 12th largest banks in terms of assets, respectively.

Permata shares ended unchanged at Rp 900 on the Jakarta Stock Exchange on Friday.

The government, which has a 97.17 percent stake in the publicly listed Permata, plans to sell another 20 percent stake in the bank to public investors next year. Proceeds from the divestment will help finance the state budget deficit, which is heavily burdened by the huge cost of bailing out banks during the late 1990s financial crisis.

Permata was formed in 2002 from the merger of five ailing banks: Bank Bali, Bank Universal, Bank Arthamedia, Bank Prima Express and Bank Patriot, all of which were controlled by the government.

The country's banking industry has begun to recover from the devastating financial crisis, with many banks reporting strong earnings so far this year thanks to a lower interest rate environment, which makes the cost of funds cheaper.