UOB to buy Bank Buana shares
UOB to buy Bank Buana shares
Rendi A. Witular, The Jakarta Post, Jakarta
United Overseas Bank Ltd. (UOB), Singapore's second largest
bank, announced on Tuesday it was seeking to acquire a 23 percent
stake in Indonesia's mid-sized Bank Buana in a bid to gain access
to the country's market of 210 million people.
The planned acquisition is part of a rising number of foreign
takeovers in the country's medium-sized banking sector.
In a statement to the Singapore Exchange (SGX), UOB said it
had entered into an exclusive arrangement with PT Sari Dasa Karsa
of Indonesia to conduct a due diligence with a view to buying a
23 percent stake in Bank Buana.
Sari Dasa currently holds a 54.93 percent stake in Bank Buana.
UOB said the proposed acquisition was subject to all relevant
approvals in Singapore and Indonesia being obtained and to
definitive agreements being signed.
The 23 percent acquisition would be worth about Rp 800 billion
(US$93 million), based on the current share price of Bank Buana.
The bank's shares on the Jakarta Stock Exchange ended higher by
Rp 100 at Rp 700 on Tuesday.
Bank Buana director Pardi Kendy told The Jakarta Post the bank
had decided to enter a partnership with UOB in order to expand
its network in the regional and domestic markets and to
strengthen its financial ability.
"UOB has a broad knowledge of international banking
activities, which can be a particular advantage for Bank Buana in
its attempt to expand its business regionally," said Pardi.
He expected the partnership would transform Bank Buana into
one of the 10 largest banks in the country in terms of assets in
a year or two.
Pardi also hinted that there was a possibility that UOB might
acquire a majority stake in Bank Buana over time.
Bank Buana, Indonesia's 11th largest lender, was established
in 1956 as a privately owned national bank. Since July 2000, Bank
Buana, which has a network of 171 offices and 92 automatic teller
machines, has been listed on the Jakarta and Surabaya stock
exchanges.
As of December 2003, the bank's total assets reached Rp 14.3
trillion with a net income of Rp 221 billion. The return on
equity and on assets stood at 17.0 percent and 2.3 percent,
respectively.
Bank Buana was one of the few banks in Indonesia that was able
to survive without a government bailout in the aftermath of the
financial crisis of 1997.
According to Pardi, this year the bank expects to boost its
lending by Rp 1.8 trillion to Rp 7 trillion, mostly to small and
medium enterprises.
The bank has also projected Rp 250 billion in net profit this
year, up from Rp 221 billion last year.
Analysts have noted that foreign banks are aggressively trying
to tap the Indonesian banking sector, which still has plenty of
room for improvement in lending activities with various economic
sectors still untapped.
With a market of 210 million people, 10 times neighboring
Singapore and Malaysia combined, the country's banking sector
promises a lucrative return for foreign investors.
Several weeks ago, UOB rival Overseas-Chinese Banking Corp.
acquired a 22.5 percent stake in Bank NISP, Indonesia's 12th
largest bank and also a competitor of Bank Buana.
Zurich-based ICB Financial Group has plans to buy a
controlling stake in Bank Bumiputera. Another medium-sized
lender, Panin Bank, has completed moves to allow its foreign
partner, Australia and New Zealand Banking Group Ltd., to
increase its ownership from 11 percent to 29 percent.