The Jakarta Post, Jakarta The sale of a majority 58.41 percent stake in Bank Bumiputera is expected to be completed in May, according to a senior officer of the mid-sized bank. "According to the divestment plan schedule, our new investor will hopefully be determined in May," marketing director Toto Moeljono said on Tuesday on the sidelines of a launching ceremony for the company's latest customer appreciation program.

Toto explained that there were three investors interested in acquiring the bank. They include Bank Panin, insurance company AJB Bumiputera 1912 and Malaysian financial holding group International Commercial Bank (ICB). The majority stake on offer consists of shares owned by three subsidiary companies of state-owned investment firm PT Danareksa: PT Reksasentosa Dinamika, PT Reksatama Dinamika and PT Cipta Usaha Citra Dana.

Toto further said that Bank Bumiputera would also press ahead with its two principal strategic plans for this year: the issuing of asset-backed securities worth Rp 1 trillion (US$117.65 million) and of subordinated bonds worth Rp 200 billion. The asset-backed securities, he explained, were expected to raise cash to support the bank's lending operations, while proceeds from the bonds would increase the bank's capital adequacy ratio to 12 percent from the current 9 percent. "The plans will hopefully start to be rolled out in June as scheduled," he said. Toto, however, said that even though the plans had been approved by the bank's shareholders meeting earlier this year, the bank would still have to heed the views of its new majority investor.

"If our new investor requests another meeting to discuss and approve the plans once again, then we will hold such a meeting," he said. Asset-backed securities are bonds that are based on an underlying pool of assets. A special purpose trust or instrument is set up and takes title to the assets, while cash flows are passed through to investors. The type of assets that can be used under such schemes range from residential mortgages to credit card receivables. It is a relatively new kind of debt instrument in Indonesia. In fact, Bank Bumiputera will be the first bank to launch such securities here.

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UOB to buy Bank Buana shares
The Jakartapost

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.

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